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Betting, Alcohol, Drugs: New B.A.D. ETF Will Live Up to Its Name

By Elaine Chen

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What You Need to Know

  • Listed Funds Trust is planning to create a passive product that will track an index of betting, alcohol and drug companies.

In an investing world seemingly obsessed with doing good, one exchange-traded fund issuer is looking to profit from the not-so-good.

Listed Funds Trust is planning to create the B.A.D. ETF, a passive product that will track an index of betting, alcohol and drugs companies, according to a Monday filing.

The gauge, developed by Thematic Investments LLC, includes U.S.-listed stocks as well as American Depositary Receipts and Global Depositary Receipts from both developed and emerging markets.

It will comprise companies that make most of their cash from casinos or gaming, making or selling alcohol or cannabis, and developing pharmaceutical products, the filing said.

The fund, which does not yet have a ticker, will have an expense ratio of 0.75%.

The proposed new ETF comes as most of the investment world turns toward funds that meet higher environmental, social and governance standards. Many such products screen out so-called sin stocks, or companies involved in businesses that some people consider unethical.

These standards vary across geographies and investors, but the term generally includes stocks linked to gambling and alcohol as well as tobacco and weapons. Just last month, Cathie Wood’s Ark Investment Management filed for a Transparency ETF that cuts out industries including alcohol and gambling.

Nonetheless, such ventures can generate significant cash and fund providers have taken note. Elsewhere in her ETF lineup, Wood is heavily invested in DraftKings Inc., the online gaming firm.

In July, Ross Gerber’s firm launched the AdvisorShares Gerber Kawasaki ETF (ticker GK), which among other things invests in “things that used to be illegal” — namely cannabis and online gambling companies.

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