US-based investment firm Azoria plans to launch an ETF, Azoria 500 Meritocracy ETF (SPXM), which will include all S&P 500 stocks except 36 companies that hire based on diversity, equity and inclusion (DEI) targets rather than employee metrics.
The philosophy behind this move is that companies that hire based on race and gender but not skill and merit tend to underperform the market.
During a recent FoxNews interview, Azoria CEO James Fishback said that the new ETF, expected to be launched in early 2025, will "call out three dozen companies" for being unethical and pursuing "value-destructive behaviour that hurts shareholders."
New ETF In Alignment With Trump's Mandate
Fishback unveiled the new anti-woke ETF, which almost mirrors the S&P 500 index, at President-elect Donald Trump's Mar-a-Lago residence in Florida earlier this month.
A former trader at David Einhorn's Greenlight Capital, Fishback plans to raise £793.02 million ($1 billion) via the ETF by the end of 2025.
"I think it'll be part of President Trump's historic mandate, calling out these companies, calling out government practices that put hiring on race and gender as opposed to skill and merit," Fishback told FoxNews.
Fishback explained that he chose Trump's residence for the filing because he supports the Republican billionaire.
The GOP has several supporters who oppose ESG-based investing since qualifying as an ESG fund might require asset managers to include companies prioritising DEI policies for hiring.
'It Shouldn't Matter How Employees Look Like"
While reiterating that hiring based on race and gender will likely lead to the downfall of company stock prices, Fishback explained that his company's ETF will ensure investors own S&P 500 companies that seek to "hire the best and brightest, no matter [what] they look like."
Starbucks, BlackRock, Vanguard, and Best Buy are big names that could be excluded from the new ETF.
Starbucks Is An Obvious Exclusion
Starbucks will most likely be excluded from the new ETF since Fishback had exclusively highlighted the coffee company's first release of its desired DEI timeline at the start of this decade.
"They announced they wanted to achieve 30% racial and ethnic diversity. What on earth does that have to do with making a coffee at a profit in America?" he said, referring to Starbucks. "You hire the best and brightest no matter what they look like. That's how you put employees and shareholders first."
The Azoria CEO also pointed out that Starbucks is "up only 12%" over the past five years compared to the S&P 500's 100% jump. "The espresso machines and the Wi-Fi aren't the issues. It's the people that are at the core of its business," he added.
However, Fishback clarified in a New York Post op-ed that his companies won't banish these DEI-focused "anti-meritocratic companies forever."
As of now, analysts think that a correlation between company recruiting guidelines and underperformance is yet to be ascertained.
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