ETF Managers Group in partnership with Spirited Funds, LLC, debuted a new ETF, the Spirited Funds/ETFMG Whiskey & Spirits ETF (NYSE Arca: WSKY) on Wednesday, October 12, 2016. Here is a synopsis of the new ETF:
|Exchange: NYSE Arca
|Name: Spirited Funds/ETFMG Whiskey & Spirits ETF
|Net Expense Ratio: 0.75%
The Spirited Funds/ETFMG Whiskey & Spirits ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Spirited Funds/ETFMG Whiskey & Spirits Index.
The Spirited Funds/ETFMG Whiskey & Spirits Index tracks the performance of the exchange-listed common stock (or corresponding American Depositary Receipts (ADRs) or Global Depositary Receipts (GDRs)) of companies across the globe (including in emerging markets) that are engaged in the production of whiskey and/or spirits.
The initial universe of Index constituents (Index Universe) consists of companies that are whiskey and/or spirits distilleries, breweries, and vintners and related luxury goods companies engaged in the sale of whiskey or the production and sale of mixers for use with premium spirits. The Index Universe is then screened to eliminate the stocks that have a market capitalization of less than $100 million, insufficient liquidity, have only recently been listed on an exchange, or are not listed on a developed or emerging markets exchange.
Companies in the Index Universe are then classified as “Core” or “Non-Core.” Core companies are those that operate a whiskey distillery and are primarily engaged in the production of whiskey and/or spirits (i.e., earn more than 50% of their profits or revenues from the production of distilled beverages). Non-Core companies are companies in the Index Universe that are not categorized as “Core” companies. Non-Core companies in the luxury goods industry are kept in the Index Universe only if they have annual whiskey and/or spirits sales of at least $500 million annually, and Non-Core companies primarily in the soft drinks industry are kept in the Index Universe only if they earn revenue from whiskey sales or primarily engaged in the production and sale of mixers for use with premium spirits.
At the time of each reconstitution or rebalancing of the Index, the companies remaining in the Index Universe will constitute the Index. The companies included in the Index will be weighted by their market capitalization, provided that the aggregate weight of the Core companies will be at least 85% of the Index. In the event the aggregate weight of the Core companies at the time of a rebalance would be less than 85%, the additional needed weight will be subtracted from the Non-Core companies and added to Core companies in proportion to their market capitalizations. Each Core company will have a weight of at least 4.9%, and no single Non-Core company will exceed a 4.9% weight at the time of each rebalance, with any remaining weight will be distributed proportionally among the other Non-Core companies. Additionally, the aggregate weight of companies in the Index with an individual weight of more than 5% will not exceed 50% at the time of each rebalance.
The Index is reconstituted and rebalanced quarterly, effective at the close of trading on the 3rd Friday of each March, June, September, and December. Additionally, the Index will be rebalanced (i.e., components reweighted) without being reconstituted (i.e., components added or deleted) if the aggregate weight of the Core companies falls below 80% for five consecutive trading days (Rebalance Trigger), such that the aggregate weight of the Core companies will be 85% (with individual weights adjusted in proportion to market capitalizations) as of the close of trading on the fifth trading day after the Rebalance Trigger. Reduced thresholds for market capitalization and liquidity apply to limit the turnover of companies included in the Index.
The Index is co-developed and co-owned by ETF Managers Group LLC, the Fund’s investment adviser, and Spirited Funds, LLC. The Index is calculated and maintained by an independent third-party calculation agent. As of September 22, 2016, the Index had 23 constituents, 20 of which were foreign companies, and the three largest stocks and their weightings in the Index were Diageo Plc (24.21%), Pernod Ricard SA (10.52%), and Thai Beverage PCL (6.07%).
Fund Top Consituents (10/14/16):
|THAI BEVERAGE PLC
|BROWN FORMAN CORP
|LVMH MOET HENNESSY
|DISTELL GROUP LTD
|CORBY SPIRIT & WINE LTD CL A
|CONSTELLATION BRANDS INC
|MGP INGREDIENTS INC NEW
|DAVIDE DE CAMPARI
WSKY Home Page
Here is a comment from David Bolton, President and CEO at Spirited Funds:
“We believe we’re at year 5 of a 25-40 year supercycle that could see continued growth in consumer demand for whiskey and spirits, much like what has occurred with craft breweries over the past two decades. “Our new Exchange-traded Fund is the first to provide exposure to this global industry – with the overall alcohol industry boasting sales of more than $1 trillion per yeari – and is intended to play a complementary role in a diversified investment portfolio through exposure to a targeted segment of the consumer discretionary sector.”