Today, a newcomer to the ETF space has made its debut with a roster of four thematic ETFs. Emles Advisors’ new products, as well as their tickers and expense ratios, are as follows:
- Emles @Home ETF (LIV), 0.49%
- Emles Made in America ETF (AMER), 0.49%
- Emles Real Estate Credit ETF (REC), 0.48%
- Emles Federal Contractors ETF (FEDX), 0.60%
The funds all list on Cboe Global Markets, the parent company of ETF.com.
“We are singularly focused on delivering innovative asset classes that investors have historically struggled to access,” Emles Advisors CEO Gabriel Hammond said. He previously founded and then sold such companies as SteelPath and Alerian.
The four ETFs all target very specific themes but are quite different from one another.
LIV’s underlying index covers U.S. stocks and American depositary receipts (ADRs) of companies that provide products and services that people use in their life at home, including in the areas of work, entertainment, security, fitness and social media. Eligible companies are screened for their relevance and revenue exposure to the targeted theme as well as their financial health. As of late September, the index had 27 components.
Hammond notes that COVID-19 has only accelerated the trends that are captured in this ETF, and he believes it is a long-term trend that will play out over the next decade or two.
AMER tracks an index that solely covers U.S.-listed and -domiciled companies. The securities in the index are selected from the annual Industry Week Top US Manufacturing Companies list and must generate at least 85% of revenue from the U.S. or Canada and at least 70% from the U.S. alone, among other requirements. Interestingly, the methodology excludes “energy or energy-related, financial services and distribution sectors,” according to the prospectus. It had 60 components as of the end of September.
REC’s underlying index covers corporate bonds that are issued by U.S. companies on the U.S. fixed income market. The issuing companies all operate in the real estate sector, and the securities can be investment-grade or high-yield but must have at least 36 months of remaining maturity. The index included 373 issues as of the end of September.
Hammond notes that he wouldn’t want to own equity REITs in the current environment, and that real estate-related fixed income securities have been outperforming and that there is not much given up in terms of the coupon. REC provides an alternative, for example, for institutional investors that may be required to allocate a certain amount of assets to real estate.
FEDX tracks an index that targets U.S. companies that derive at least 40% of their revenues from government contracts. The prospectus notes that those companies are most likely to come from the aerospace & defense, information technology, cybersecurity and health care industries. Securities must meet size and liquidity requirements. As of the end of September, the index included just 14 securities.
The fund is designed as a sort of downside protection vehicle, according to Hammond, due to the involvement of federal contracts, which are fairly stable relative to the overall stock market. It’s also a unique space that had not been targeted before.
Contact Heather Bell at [email protected]