Gen-Z ETF to Shutter After Teenage Values Pitch Falls Flat

 

• Closing of the fund isn’t terribly surprising, Strategas says
• ZGEN launched at end of 2021, has held Duolingo, Tesla, others

An exchange-traded fund tracking US companies that adhere to the values of Generation Z is shuttering hardly more than a year after its launch.

The Generation Z ETF (ticker ZGEN), which launched at the end of 2021 and counts companies like Duolingo Inc. and Tesla Inc. among its top holdings, will cease trading and be closed for purchases at the end of the session on March 17. Behind its launch were Julian Feder and Eitan Prins-Trachtenberg, both teenagers at the time of the fund’s inception. 

Its sub-adviser, Alkali Fintech LLC, cited the “macroeconomic climate” and sluggish market among reasons for their decision to close fund, according to a Friday release. The ETF has fallen 26% over the past year through Thursday, and has seen minimal inflows during its lifetime.

“Thematic funds — especially those focused on niche corners that are overweight tech — have faced a challenging environment over the last year as rates have skyrocketed,” said Todd Sohn, ETF strategist at Strategas Securities. “Many of the companies were born during the QE era and performance is reflecting this. Drop that into the ultra-competitive ETF environment, and the closing of the fund isn’t terribly surprising.”

 

 

ZGEN assigned firms a Gen-Z score based how much people part of that age group — those born after Jan. 1, 1997 — use a company and how much a company targets them. It also took into account how much a firm’s mission relates to “the core values of Gen Z,” among other factors listed on its website. 

But the fund never caught on with investors. Its last inflow happened in June of last year, according to data compiled by Bloomberg. As of Thursday, its assets totaled just $1.3 million. 

“After careful consideration of a number of factors, including the negative macroeconomic climate that has significantly affected the underlying constituents and the ability to deliver on the ETF mandate, the Board concluded that it is advisable and in the best interest of the Fund and its shareholders to liquidate the Fund,” according to the release.

https://www.bloomberg.com/news/articles/2023-03-03/teenager-backed-etf-to-shutter-as-generation-z-pitch-falls-flat