The ESG Orphans Index & $ORFN is an apolitical investment thesis. These are excluded securities avoided by the ESG investing bubble.
Hedge fund legend Cliff Asness called these high expected return securities. The ESG Orphans are fossil fuel, nuclear energy, weapons, alcohol, tobacco, & gambling. Shunned by malinvestment & misallocation of funds via ESG capital constraints.
Weapons are vital, see Russia/Ukraine. US funds to the Ukraine purchase munitions from RTX, LMT, GD, and NOC. China/Taiwan is heating up. Bernie Sanders & Ted Cruz are aligned; it’s apolitical.
Alcohol & tobacco products are unhealthy. I don’t smoke, rarely drink. But who decided Pepsi/Coke junk food & T2 diabetes/obesity was OK, but alcohol/tobacco ills are not? Junk food in school vending machines is wrong! My kids are against alcohol & tobacco, but we battle about junk food. T2 diabetes & obesity societal costs exceed costs of alcohol & tobacco by nearly 50% annually.
Nuclear energy is safe, clean, and renewable and run US submarines & aircraft carriers. A marble-sized piece of uranium holds more energy than a ton of coal. Nuclear energy could solve much of the world’s energy problems. Anti-nuclear seems anti-human; benefits outweigh the costs. Ask the US military.
Fossil fuel reduced hunger & poverty while allowing humans to flourish for a century. Like nuclear energy, the US military is one of the world’s biggest users of fossil fuels. Stigmatizing it and disincentivizing it restricts use of efficient energy. We need fossil fuels to develop new energy sources and to power factories. Also, cynically, those campaigning for new energy (and climate change!) need to fly around to tell everyone. Human mobility is a freedom. Why are we shaming that?
The ESG Orphans are a basket of ESG exclusions. It stewards investment to underinvested areas arbitrarily excluded from the investment landscape. ESG AUM has doubled over the past 5yrs. This has depressed the excluded ESG Orphans. They are under owned, a value proposition.
We created the ESG Orphans Index & $ORFN to enable investors to apolitically invest capital to maximize returns. We don’t use all these industrial products, but our fiduciary goal is to steward capital towards the greatest expected returns per unit risk.
The investment thesis behind the ESG Orphans capitalizes on these profitable, and currently depressed, opportunities. This concept is time tested. We like the odds. It’s not political, but smart portfolio management.
