Elon Musk, Mark Zuckerberg fail to make cut in new 'high character' CEO ETF
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Mr Elon Musk (left) and Mr Mark Zuckerberg have each endured their share of controversy.
PHOTOS: REUTERS, AFP
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NEW YORK (BLOOMBERG) - A new exchange-traded fund (ETF) is tapping into America's love affair with strong corporate leaders - while leaving out two of its most famous tech pioneers.
The Return on Character ETF seeks capital appreciation by targeting the stocks of businesses led by "high character" chief executive officers, according to a regulatory filing. The actively managed strategy uses a model based on "integrity, responsibility, forgiveness and compassion", manager ROC Investments said in a release.
Among those whose firms did not make the cut: Mr Elon Musk and Mr Mark Zuckerberg. The first data show neither Tesla nor Facebook parent Meta Platforms are included in the portfolio, while rival mega-cap stocks such as Apple and Amazon.com - helmed by Mr Tim Cook and Mr Andy Jassy, respectively - are among top holdings.
Mr Dan Cooper, portfolio manager and founder of ROC Investments, said the firm's research determines which stocks are included, a decision that is not based on popularity or market capitalisation. He declined to comment on why Tesla and Meta were omitted at launch.
"It would be wonderful someday if the entire Fortune 500 was on the list," said Mr Cooper. "I don't see this as a static thing."
The mandate may sound fluffy, but ROCI enters one of the oldest debates in organisational management: Just how much difference does a chief executive officer make?
While some dismiss the tendency to attribute a company's success to one individual, research presents a more nuanced take. Some studies highlight the damage caused by the loss of a good leader, while a high-performing executive also needs a good company to succeed.
"The business of character science is a work in progress," said Mr Cooper. "As a new area of research, we hope to be better and better every year."
Managers of the ETF use proprietary tools to parse the public language of the CEOs of approximately the largest 1,000 companies in the United States. There is a behavioural assessment, a "controversy" assessment and character-scoring before a portfolio is built using the top 75 to 150 companies. A complete re-evaluation will be done annually.
Mr Musk and Mr Zuckerberg have each endured their share of controversy.
The outspoken Tesla boss has drawn scrutiny from regulators for his use of Twitter, and a 2018 tweet about taking the company private ended in a US$20 million (S$27 million) fine and Mr Musk's resignation as chairman.
Mr Zuckerberg has faced a range of issues at Meta, including an investor lawsuit over whistle-blower concerns that the company's social media platform negatively affects teen mental health.
