A new fund is aiming to capitalize on the opportunities that have been skipped over by “woke” investing — and has drawn high-profile backers from conservative political circles.
A $150 million fund that’s being launched by 1789 Capital has created a new framework it calls EIG — or entrepreneurship, innovation, and growth — as opposed to the standards of ) that have come to wield outsize influence on Wall Street.
GOP mega-donor Rebekah Mercer, who backed Breitbart and Cambridge Analytica, and former Arizona Senate candidate Blake Masters, who ran Peter Thiel’s family office, are both investors.
“We’ve had more than a decade to extrapolate whether ESG is successful… metrics show ESG stocks have underperformed and destroyed value,” Omeed Malik, founder and president of 1789 told On The Money. “There is a huge opportunity to be a different kind of capital provider.” Malik co-founded 1789 with Chris Buskirk.
At the end of last year, The 10 largest ESG funds by assets had all posted double-digit losses, with eight falling even more than the S&P 500’s 14.8% decline, according to Bloomberg.
Laggards included BlackRock’’s $20.7 billion iShares ESG Aware fund and Vanguard’s $5.9 billion ESG US Stock ETF.
“We’re entering a new era.. interest rates aren’t zero and it’s getting harder to make money,” Malik adds. “You want to make sure you’re investing in great businesses, not pie in the sky ideas that make you feel good”
As the economy falters and the easy-money era of the last decade screeches to a halt, the EIG fund is betting investors will be less concerned about how many women are on a company’s board and more concerned about that company’s bottom line.
1789 Capital — named for the year the Bill of Rights was adopted — will invest in companies that support American manufacturing and those that have been shunned by the ESG movement like conventional fossil fuels.
The EIG framework also will guide 1789 to invest in the “parallel economy” — or non-woke companies.
“We know there is a demand for non-woke/patriotic companies,” Malik notes. “There are 100 million Americans who have been both ignored and alienated and want to use and shop at platforms that aren’t antithetical to their values.”
One example of a company in the “parallel” economy is PublicSq., which Malik’s SPAC is taking public. PublicSq. aims to become the next big online shopping destination — but for businesses to participate, it’s requiring that they commit to values like “freedom,” “family,” and “the Constitution.”
While the first fund is just accepting capital from family offices and high-net worth individuals for now, Malik said 1789 will expand the scope of their funds in future to meet demand.
He predicts millions of investors will be interested.
While they aren’t accepting institutional money now, they could be the beneficiary of states that are pulling pensions from BlackRock and other pro-ESG investors.
The fund is launching as companies that have embraced progressive values like Anheuser-Busch and Target are losing tens of billions of dollars in market capitalization and seeing sales decline.