Investing

Subversive Capital Offers Wellness Play With New Mental Health ETF

Investors looking to start the new year with some added well-being in their portfolio have a built-for-purpose fund to consider.  

 A new mental health-focused exchange-traded fund (ETF) has launched with a kicker of a ticker, “SANE.”

New York-based Subversive Capital closed 2022 by launching its Subversive Mental Health ETF (SANE) on December 30, alongside two other industry-specific actively managed funds, one focused on renewables and one on food security. The launch takes Submersive deeper into the ETF space, a relatively new area for the venture capital firm, which has mainly focused on early-stage funding and SPACs since its inception in 2013. In addition to its preexisting metaverse-themed fund, Subversive now manages four ETFs with combined assets totaling $2.6 million in assets

According to its prospectus, SANE aims to “identify mental health companies working on new tools, treatments, and medications designed to help address the global toll of untreated or ongoing mental health issues, including major depressive disorder.” 

SANE is a unique example of a well-defined thematic ETF. While most themed ETFs provide exposure to a whole industry, such as energy or healthcare, fewer focus on niche categories like mental health. There are already 62 healthcare ETFs listed on U.S. markets, collectively managing over $100 billion in assets, according to ETF.com data. SANE’s focus on psychological health may have it stand out in this crowded category. 

The fund will invest at least 80% of its holdings in “Mental Health Companies,” defined as firms with at least 50% of assets or revenues based on products or services used in treating, preventing, or diagnosing long-term mental health disorders (including those in adjacent metabolic health categories such as fitness, sleep, and nutrition). 

SANE has a total of 30 holdings, all in single-digit percentage weightings. Some of these equities are close to pure brain health plays, like Sage Therapeutics (SAGE), Supernus Pharmaceuticals (SUPN), and Jazz Pharmaceuticals (JAZZ). Others, however, like Merck & Co (MRK), Eli Lilly (LLY), Bristol-Myers Squibb (BMY), and Pfizer (PFE), cover more of the broader pharmaceutical industry and are commonly found in other healthcare-focused funds.  

The fund manager’s holistic view of psychological health may explain the breadth of its holdings. 

“The last few years of the pandemic, economic uncertainty, and a war in Europe have laid bare the stark reality, and cost, of the global mental health crisis… One missing piece of the puzzle is the dramatic rise in metabolic syndrome and inflammation; and their apparent direct connection to brain health,” Subversive’s Portfolio Manager Christian Cooper said in a news release.

“The most recent research has even begun to refer to Alzheimer’s and Parkinson’s disease as “Type III” diabetes, which reflects the idea behind the SANE Fund: that metabolic health is mental health,” he added. 

“To us, this means everything from owning companies focused on the early detection and management of metabolic syndrome to large pharmaceutical companies developing drugs for diabetes, depression, Alzheimer’s, and metabolic epilepsy.”

According to IMARC, the global mental health market size exceeded US$400 Billion in 2022. The research firm forecasts the industry will sustain a compound annual growth rate (CAGR) of 3.4% during 2023-2028, by which point it will be valued at over US$500 billion by 2028.

Investors looking for exposure to mental health solutions will likely consider SANE a well-defined niche play in healthcare.  

SANE has an expense ratio of 0.75% and is currently trading around $25 on the Chicago Board Options Exchange.

This article was produced and syndicated by Wealth of Geeks.

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