WASHINGTON (SBG) — America's largest publicly traded companies are increasingly throwing their weight behind progressive social and political issues. One investment fund has rejected "woke" corporate culture and created an exchange-traded fund (ETF) for conservatives.
William Flaig has worked in investment management for over 25 years and is the founder and CEO of American Conservative Values ETF (ACVF), a $25 million fund that avoids investing in large-cap companies it determines have a liberal activist agenda.
"A lot of products have come out that seem to focus on issues that don't really resonate with politically conservative investors," Flaig said. So he and ETF president Tom Carter built a fund for investors concerned about free speech, liberal media bias, Second Amendment rights, religious freedom and life. "Nothing like that existed or still exists, beyond my product."
Many investors are unaware of which companies they are supporting in their 401Ks, index mutual funds and other financial products, he said. "Once people become educated and they realize where their investment dollars are going, they don't like that. They're uncomfortable and they'd prefer an alternative."
With scores of products catering to environmental, social and corporate governance values, the American Conservative Values ETF has attracted investors who identify with the ideas of "American exceptionalism," individual liberty and "the defense of traditional social norms." According to Flaig, for every dollar invested in the fund, 27 cents avoid the companies most hostile to conservative values.
Since it was founded last year, the fund expanded from $2.5 million to $25 million and performed just 1% below the S&P 500 Index. Flaig says that's a sign of success, considering his fund is boycotting many of the S&P's most heavily weighted stocks, including Apple, Facebook, Amazon, Alphabet (Google) and JPMorgan Chase.
It's a challenge to balance the concerns of conservative investors against the performance of the fund. "It seems like almost every large-cap company is leaning left to some degree," Flaig said. "We can't boycott them all, or sadly there would be nothing to buy. So, we have to be selective in which companies we target."
The fund is currently boycotting over two dozen companies and adding more as new issues arise.
Most recently, American Conservative Values ETF announced it was divesting holdings in Bank of America Corp., Lowe's Co., Inc. and American Express Co. after a conservative outcry that the companies were reportedly teaching employees critical race theory.
Bank of America was slammed by conservatives for implementing a "woke at work" training program earlier this year. The initiative was sponsored by Lowe's and Truist Financial.
According to a report by the Manhattan Institute's Christopher Rufo, the 21-day program taught employees that America is a structurally racist society and encouraged white employees to identify their "white privilege" while discussing concepts like "microaggressions," "racial trauma" and "the abolishment of the police."
American Express came under fire for a similar employee training program, including a lecture where employees were told they were "complicit in giving privileges in one community against the other." The company was also sued by a former white male employee alleging he was fired due to "reverse racism."
American Conservative Values ETF also announced it was divesting holdings in Nasdaq, Inc. after it announced all companies listed on the exchange would have to submit annual reports on board diversity. Companies would also need to show they have at least two board members that identify as female, LGBTQ, or a member of a racial minority group. The Securities and Exchange Commission approved the proposal last month.
Corporate activism has been increasing in recent years with a growing number of consumers saying they want to support companies that align with their social and political values. Market research showed a majority of Americans wanted to see companies take a meaningful stand on issues of equality, and many did.
Earlier this year, the fund added Coca-Cola and Delta to its boycott list after both Atlanta-based companies weighed into the debate over the Georgia voting law with scathing criticism of the legislation.
Flaig acknowledged that many times companies are "greenwashing" issues and paying lip service without fundamentally altering business practices. But he believes that is changing in ways that will impact investors.
"Ultimately, I believe that companies that are involved in politics are doing their shareholders a disservice. They should be focused on maximizing the bottom line for the people who own their shares," Flaig said.