Hurricane-themed ETF to be liquidated

An ETF that invests in companies involved in natural disaster recovery and prevention will be shuttered, its sponsor disclosed last week, just days after Hurricane Helene made landfall in Florida.

ProcureAM, which manages the roughly $3mn Procure Disaster Recovery Strategy ETF (FIXT), filed to dissolve the fund last week following approval from its board of trustees. The fund’s last day of trading on the Nasdaq exchange will be October 17, according to a regulatory filing.

“We kept this fund afloat with minimal assets under management for two years with the concept that we had high conviction in . . . Unfortunately, we just didn’t see very much demand there,” said ProcureAM’s chief executive Andrew Chanin.

The fund recorded net inflows of more than $732,000 between May 2022, when it was launched, and September 30 this year, according to data from Morningstar Direct.

This article was previously published by Ignites, a title owned by the FT Group.

The ETF is the only fund that sits within the Morningstar disaster recovery sub-theme, Dillon McConnell, a Morningstar analyst wrote in an email.

“From a thematic fund perspective, a small provider and a small asset base is the usual recipe for closure, as the resources dedicated to these ETFs all have opportunity cost,” Lan Anh Tran, a Morningstar manager research analyst, wrote in an email.

“Gaining enough investor attention is quite difficult in today’s crowded ETF market, so it’s even harder for a smaller shop to get their products off the ground.”

ProcureAM had worked alongside VettaFi to develop an index specifically for the ETF that comprised companies providing services meant to help those recovering from earthquakes, floods, hurricanes and wildfires.

Those included construction, electricity, engineering and machinery companies such as UK-based Balfour Beatty and US-based Great Lakes Dredge & Dock and Sterling Infrastructure, according to a listing of the ETF’s investments from January.

“This was something that was near and dear to my heart,” said Chanin, who has worked in the investment management industry for roughly two decades. He had several personal experiences with natural disasters that pushed him to launch the fund more than two years ago.

Chanin was a junior at Tulane University in New Orleans when Hurricane Katrina struck, forcing him to evacuate. Years later, after joining the ETF industry, just as he was gearing up to launch his own company named PureFunds, New York was hit by Hurricane Sandy.

“These past experiences led me to be interested in creating a product that focused on this area that no one had really developed a coherent strategy around — these companies that helped us most before, during and after natural disasters,” he said.

Alongside a lack of investor demand, there was little appetite from distributors to add the ETF to their investment platforms, Chanin said.

This past Earth Day, ProcureAM opted to waive the fund’s management fee in a final bid to generate some interest in the ETF. But doing so proved ultimately unsuccessful.

“It’s just not where people have been pouring money in for these last two years,” he said.

Once the ETF is shuttered, there will no longer be any funds available to investors that sit within Morningstar’s disaster sub-theme, even as US states across the east coast grapple with the aftermath of Hurricane Helene and as clean-up from Hurricane Milton occurs in Florida.

An estimate from Moody’s Analytics places the total damage caused by Hurricane Helene at $34bn.

Despite the havoc and destruction caused by the storm, there was still little interest in the ETF among investors, Chanin said.

The ETF is one of two that ProcureAM offers. The manager’s first strategy, the $34mn UFO Procure Space ETF, was launched in April 2019.

Chanin explained that the UFO ETF has some characteristics similar to the Disaster Recovery Strategy ETF because of its investments in companies that build and operate satellites, which are used for weather monitoring, storm tracking and measuring ocean temperatures.

“Just because [the FIXT ETF] is in the process of winding down doesn’t mean that we won’t have a solution for those who want to invest in companies helping with natural disasters,” he said.