‘Anti-ESG’ fund shop Strive Asset Management has debuted its second ETF alongside open letters to Apple and Disney asking the giant US companies to focus on their bottom lines and not what it deems to be ESG factors.
The two mega-caps are among the constituents of the Strive 500 ETF (STRV), a passive strategy tracking the largest 500 companies in the US with an expense ratio of 0.05% that launched Tuesday. It is the second strategy on the market from Strive, an Ohio-based firm led by conservative social commentator Vivek Ramaswamy with an explicit anti-ESG bent and funding from billionaires including Peter Thiel and Bill Ackman.
‘Our message to America’s largest companies is simple: focus on your mission, not someone else’s social agenda. Hire talent based on merit over other social factors,’ Ramaswamy said in a statement. ‘We hope to drive positive change through our shareholder engagement.’
Strive’s letter to Apple said the asset manager, which at this point owns almost none of the tech giant, was concerned by Apple’s decision to conduct a ‘civil rights audit’ following a recent shareholder proposal that Strive notes was supported by BlackRock, itself a target of Republican officials for its ESG policies. That study will take a look at Apple’s handling of issues such as pay equity and workplace discrimination.
‘We believe this decision jeopardizes Apple’s value by elevating divisive identity politics above its commitment to excellence, while also raising serious legal and commercial risks for the company,’ Strive wrote. ‘Racial equity audits do not benefit the companies that conduct them.’
The audit was advocated for by activists including Color of Change, which noted that nearly three-quarters of Apple’s global leaders are men and said the iPhone manufacturer ‘has allowed musicians who popularize racist content and boast about ties to white supremacists and neo-Nazis to remain on its streaming platform.’
When it comes to Disney, Strive took issue at the company’s opposition to Florida’s Parental Rights in Education Bill, also known as the ‘Don’t Say Gay’ law that the state’s Republican govenor Ron DeSantis signed earlier this year. The legislation prevents teachers in the Sunshine State from classroom instruction regarding sexual orientation or gender identity before the fourth grade.
‘Your decision to wade into political controversy has inflicted measurable economic damage upon Disney – above and beyond the foregoing subjective factors,’ Strive wrote, citing he firm’s decline in stock price and in public approval after its actions regarding the ‘Don’t Say Gay’ bill. (The company initially said it would not get involved before reversing course and opposing the bill, and it also failed to give $5m to the Human Rights Campaign, which publicly rejected the proposed donation.)
Like Strive’s first ETF, the Strive 500 fund will be passive in terms of picking portfolio holdings while expressing its ‘anti-ESG’ sentiments via its proxy votes in the companies it owns, for example urging traditional energy companies such as Chevron to focus on oil and gas and eschew transitions to more sustainable sources, which Strive deems to damaging to shareholder value.
The launch of STRV follows the debut earlier this year of the Strive US Energy ETF (DRLL), which is focused on pushing energy companies to maximize profits without concern for factors such as their impacts on environmental quality and global heating.
It is effectively the same of the playbook successfully, albeit with the opposite agenda, as deployed by activist investor Engine No. 1, which pressured ExxonMobil to install three directors with an eye on decreasing the energy firm’s carbon emissions despite owning a tidy stake in the company,
DRLL, which began trading August 9 with an expense ratio of 0.41%, appeared off to a hot start when it raked in $238m in its first two weeks of trading and topped $300m by the end of August. It has not been able to keep up that pace and sat at roughly $321m as of the start of the week, according to Strive’s website.
The firm also has announced plans to launch the Strive US Technology, Strive US Semiconductor and Strive Emerging Markets Ex-China ETFs later this year.
