A new exchange-traded fund (ETF) called the Strive U.S. Energy ETF (NYSEARCA:DRLL) is drawing interest as its founder pushes his conservative bonafides.
The DRLL ETF was launched on Aug. 10 by Vivek Ramaswamy, who previously launched a biotech firm called Roivant. The fund has raised about $100 million since it was launched.
What investors should know is that DRLL is even more conservative than it says it is.
Ramaswamy’s Game Plan
Ramaswamy’s pitch is overtly political. He wants to use the investment power of the fund to stand against Environmental, Social and Governance (ESG) standards, which remain undefined but smell liberal to him. He is especially critical of Blackrock (NYSE:BLK), whose CEO Larry Fink has warned about the threat of climate change in his shareholder letters.
DRLL is backed by Peter Thiel and Bill Ackman, writes our Chris MacDonald. Ramaswamy has been on Fox News’s Tucker Carlson show and won endorsements from conservative media outlets.
But assets don’t have politics. The DRLL fund currently has over 40% of its money invested in just three stocks — Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and ConocoPhilips (NYSE:COP). The rest is distributed among other production, refining and pipeline stocks. From a financial point of view, DRLL seems like a cheap way to play the U.S. energy sector. The largest energy ETF, the iPath Pure Beta Crude ETF (NYSEARCA:OIL), is up over 30% this year.
The DRLL ETF and What Happens Next?
While Ramaswamy is making a political pitch, the success of his fund will ride on the value of the assets he buys. So far, those assets are quite conservative, in the investing sense. They’re in large, integrated oil companies rather than small exploration and production outfits such as Civitas Resources (NYSE:CIVI). CNX Resources (NYSE:CNX), or Northern Oil and Gas (NYSE:NOG).
If you want to bet on the future of American energy production, you’ll get more leverage in those names than in DRLL. But if you want your money to make a loud political statement, put it in Ramaswamy.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.