Engine No. 1 ETF Targets Supply Chain Resilience

The actively managed fund focuses on companies that are improving their own or others’ supply chains.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Engine No. 1 launched a first-of-its-kind exchange-traded fund earlier this week. The Engine No. 1 Transform Supply Chain ETF (SUPP) joins the issuer’s other two ETFs and looks to invest in companies that are adding value by streamlining and upgrading supply chains.  

Although ProShares launched the passively managed ProShares Supply Chain Logistics ETF (SUPL) about 10 months ago, that fund focuses on companies that include supply chain logistics as a key part of their business, whereas SUPP is an actively managed fund that targets companies around the globe that are working to improve supply chain resilience and efficiency—and thus add value—whether it be for their own use or for others’.  

SUPP charges an expense ratio of 0.75% and lists on Cboe Global Markets.  

“It has never been more important for companies to make their supply chains more resilient, while also relocalizing manufacturing and jobs to North America,” said SUPP Lead Portfolio Manager Eli Horton. “We will invest in the companies that will drive and benefit from the ongoing supply chain transformation—creating long-term economic value and meaningful social and environmental impacts.” 

Companies selected for the fund are pursuing objectives like the reshoring of manufacturing jobs, the use of automation and innovation to keep supply chain costs low and transportation improvements.  

In particular, SUPP focuses on companies that are shifting their manufacturing jobs closer to distribution centers, minimizing their environmental impact through their business practices and diversifying sourcing so that disruptions are less likely.  

The fund will look at public records around companies’ plans to build manufacturing facilities; carbon emissions; the types of products and services a company offers and how they support supply chain improvements; and the robustness of business models as they relate to a company’s profitability, according to the prospectus.  

“We’re building a portfolio that capitalizes on the transition from old technologies to new ones, from short-term expediency to long-term value creation, and away from the low-cost-at-all costs thinking of the last 30 years towards a more resilient and modern American economy that is a leader in global competitiveness and that creates well-paying jobs here at home,” Engine No. 1’s Head of ETFs Yasmin Dahya Bilger said of the fund. 

As of Feb. 16, SUPP’s top holdings included Martin Marietta Materials Inc., 7.37%; Willscot Mobile Mini Holdings Corp., 6.98%; and Advanced Drainage Systems Inc., 6.09%. The fund will typically hold between 20 and 60 securities. 

 

Contact Heather Bell at [email protected] 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.