Today, investors are raising their glasses to the first whiskey and spirits-themed exchange traded fund that focuses on distilleries, breweries, vintners and anyone else involved in the alcohol business.
ETF Managers Group has partnered with Spirited Funds to launch the Spirited Funds/ETFMG Whiskey and Spirits ETF (NYSEARCA: WSKY) on Wednesday. WSKY has a 0.75% expense ratio.
WSKY tries to reflect the performance of the Spirited Funds/ETFMG Whiskey & Spirits Index, which is comprised of companies that are whiskey and/or spirit distilleries, breweries, and vintners and related luxury goods companies engaged in the sale of whiskey or the production and sale of mixers for use with premium spirits, according to a prospectus sheet.
The universe of applicable companies are broken down into so-called Core and Non-Core holdings where Core components include those that operate a whiskey distillery and are primarily engaged in the production of whiskey or spirits, whereas Non-Core components are companies not categorized as Core companies but are involved in luxury goods and sale of spirits or mixers. If the underlying index’s aggregate weight of Core companies fall below 85%, additionally components are taken from Non-Core companies based on market capitalization.
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Rebalancing occurs quarterly. At each rebalancing, core companies have a weight of at least 4.9% of the index, and no single Non-Core company will exceed 4.9% weight.
WSKY currently has 23 holdings, with top components including a hefty 23.1% tilt toward Diageo Plc (NYSE: DEO), along with 10.9% Pernod Ricard (EPA: RI) and 6.5% Thai Beverage (SGX: Y92).
“We believe we’re at year 5 of a 25-40 year supercycle that could see continued growth in consumer demand for whiskey and spirits, much like what has occurred with craft breweries over the past two decades,” David Bolton, President and CEO at Spirited Funds, said in a press release. “Our new Exchange-traded Fund is the first to provide exposure to this global industry – with the overall alcohol industry boasting sales of more than $1 trillion per year – and is intended to play a complementary role in a diversified investment portfolio through exposure to a targeted segment of the consumer discretionary sector.”
Bolton also argued that whiskey and spirits companies have provided investors with some mitigation in down markets due to consumer behavior and the commodity-linked nature of the components.
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