Sovereign’s Capital has launched an active ETF targeting companies deemed the issuer considers to be “the most spiritually integrated firms.” The Sovereign’s Capital Flourish Fund (NYSE Arca: SOVF), the firm’s debut ETF, begins trading on the New York Stock Exchange.
SOVF invests in “companies with faith-driven CEOs who develop exceptional corporate cultures that seek outperformance and enable employees to flourish.” It’s comprised of U.S. companies of all market caps and industries, and a mix of value and growth companies.
Investing in Attractive Corporate Cultures
“It is our belief that an attractive culture creates a long-term competitive advantage for a company,” according to Sovereign’s Capital. “We believe biblical values lead to strong cultures, which attract and retain talented employees. This, we believe, will contribute toward outperformance versus peer companies over the mid-to-long term.”
SOVF holds a diversified portfolio of 80-100 publicly traded companies determined by the firm’s proprietary ranking methodology. The fund ranks companies by six categories: CEO spiritual integration, HR benefits & policies, chaplaincy, vision/mission/values, employee resource groups, and products & services. In each of the six categories, Sovereign’s Capital assigns a score from 0 to 10 then weights each category. The scores roll up to an overall score that informs the firm’s front-end criteria for stock selection.
The fund’s managers also perform fundamental analysis. They consider such variables as business quality, return on invested capital, balance sheet integrity, market expectations, cyclicality, and risk/reward.
When assessing potential constituents, the fund’s managers consider whether a company’s culture is focused on “servant leadership” and/or treating others the way they want to be treated. They also look for companies with significantly above market HR benefits for their employees. The fund also prioritizes companies with on-staff counselors to support employees through hardships.
SOVF carries an expense ratio of 0.75%.
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