ETF Watch: Whiskey Fund Launches

Today ETF Managers Group and Spirited Funds are rolling out a first-of-its-kind ETF that targets companies in developing and emerging markets that produce alcoholic beverages. The Spirited Funds/ETFMG Whiskey & Spirits ETF (WSKY) covers publicly traded distilleries, breweries and vintners as well as distributors of their products and firms that produce mixers for use with those beverages.

The fund comes with an expense ratio of 0.75% and will list on the NYSE Arca.

Companies included in WSKY's index must have market capitalizations of at least $100 million and meet minimum standards in terms of liquidity and length of time listed, the prospectus said. The index divides the companies into two tiers, with companies that include the operation of a whiskey distillery and the production of alcoholic beverages classified as “Core” companies. Core companies are weighted at at least 85% of the index.  

The remaining “Non-Core” companies include luxury goods firms that have at least $500 million in annual whiskey and spirits sales as well as soft-drink companies that are involved in whiskey distribution or that derive the majority of their revenues from the provision of mixers, according to the prospectus.  

Rebalancing occurs quarterly, and at each rebalancing, individual core companies must have a weight of at least 4.9% of the index, but "Non-Core "companies cannot have a weight of more than 4.9%.

As of late September, the index included 23 components, with Diageo Plc holding the largest weight for any single company, at 24.21%, and Pernod Ricard SA and Thai Beverage PCL with the next-largest weightings, at 10.52% and 6.07% of the index, respectively. Only three of the index’s constituents were U.S.-based.  

ETF Managers Group is also the firm behind the Restaurant ETF (BITE), which launched roughly a year ago and has $1.2 million in assets under management. BITE, like WSKY, is the only fund covering its specific slice of its target market, but unlike WSKY, its portfolio consists primarily of U.S. companies.

Contact Heather Bell at [email protected].