The new fund, which aims to capitalize on opportunities missed by ‘wake-up’ investments, has attracted prominent backers, even from conservative political circles.
$150 million fund launched by Capital of 1789 In contrast to the ESG criteria (Environmental, Social and Governance) that have come to dominate Wall Street, the company has created a new paradigm called EIG (Entrepreneurship, Innovation and Growth).
Republican mega-donor Rebecca Mercer, who backed Breitbart and Cambridge Analytica. Former Arizona senatorial candidate Blake Masters, who ran Peter Thiel’s family office, is also an investor.
“It took more than a decade to extrapolate whether ESG is succeeding…indicators show ESG stocks are underperforming and destroying value,” said 1789 Founder and President Omid Malik told On the Money. “There is a huge opportunity to be a different kind of capital provider.”
At the end of last year, the 10 largest ESG funds by asset class were all posting double-digit losses, according to Bloomberg, with eight of them losing more than the S&P 500’s 14.8% decline.
Laggards included BlackRock’s $20.7 billion iShares ESG-aware fund and Vanguard’s $5.9 billion ESG U.S. Equity ETF.
“We are in a new era. Interest rates are not zero and it is getting harder and harder to make money,” Malik added. “I want to invest in a sure-great business, not a floating idea that makes me feel good.”
With the economy faltering and the easy-money era of the past decade creaking, investors will care less about how many women are on a company’s board and more about a company’s earnings, EIG said. is betting.
Named after the year the Bill of Rights was adopted, 1789 Capital invests in companies that support US manufacturing or have been shunned by ESG movements like traditional fossil fuels.
The EIG framework would also lead 1789 to invest in “parallel economies”, companies that have not awakened.
“We know there is demand for non-awakening, patriotic companies,” Malik said. “There are 100 million Americans who have been neglected and marginalized who want to use or shop on platforms that are against their values.”
An example of a company in a “parallel” economy is PublicSq., where Malik’s SPAC is publicly traded. PublicSquare aims to become the next major online shopping site, but companies are required to uphold values such as ‘freedom’, ‘family’ and ‘the constitution’ in order to participate.
The first fund only accepts money from family offices and high net worth individuals for now, but 1789 said it will expand the scope of the fund in the future depending on demand. He predicts millions of investors will be interested.
They are not currently accepting funding from institutional investors, but could be a beneficiary of states drawing pensions from BlackRock and other pro-ESG investors.
The fund is launched at a time when companies that have embraced progressive values, such as Anheuser-Busch and Target, are losing tens of billions of dollars in market capitalization and declining sales.