ETF veteran behind TrueMark’s ESG launch
A belief in active management within the traditional ETF structure lies behind the recent launch of TrueMark, a new ETF provider which has launched with two funds, LRNZ, focused on artificial intelligence (AI), and ECOZ, the ESG markets.
ECOZ is to be sub-advised by Purview Investment’s Dr Linda Zhang, ETF industry veteran and co-founder of Women in ETFs.
Michael Loukas, TrueMark’s CEO says: “We launched with three things in mind: we believe that the ETF structure will continue to gain market share with different investment philosophies other than the original passive approach; that active ETFs in particular will begin to see increased traction and that the nascent asset classes of the new economy are a fertile environment for active management by industry specific investment experts.”
Thematically, for TrueMark, this initially means AI and ESG.
“There are several new areas of potential growth, such as AI or even cannabis, that didn’t exist in recent years,” Loukas says. “They are evolving because of advancement in disruptive technology or regulatory changes. We want to deliver true, active management and participation in these asset classes.”
The new firm is not going down the semi-transparent ETF route, saying they have nothing to fear from transparency. They also say that the choice between active and passive is not a binary decision. “They can, and should, co-exist,” Loukas says. “We want to make sure that we provide exposure to the potential alpha of these thematic asset classes with a truly active, concentrated approach.
“In our experience, with an active manager, most of the alpha comes from just a handful of names in a portfolio. In a concentrated portfolio, such as that of our AI fund, the alpha also comes from a handful of names, but without the performance drag of additional laggards. Risk management is a function of consolidating into the winners and riding them rather than diversifying.”
The new ETFs carry fees of 68 basis points on the AI ETF, and 58 on the ESG fund. Both the two new ETFs are sub-advised, ECOZ by Zhang, and LRNZ by Black Hill Capital, technology specialists with 20 years of experience in the sector.
Loukas says: “We wanted Linda as she is passionate about the ESG space, taking a deeper approach than most of the products we see out there. ESG investing is shades of grey not black and white.”
The firm hopes to attract investors from institutional to retail backgrounds. “There is a broad market for both of these subjects,” Loukas says. “The audiences are evolving as we speak and growing exponentially in the US.”