ORFN

Constrained Capital ESG Orphans ETF

Review of the Performance and Returns of the ORFN ETF Since Its Inception

Introduction

Since its launch in the market, the ORFN ETF (Organically Responsible Fund) by Constrained Capital LLC has received a great deal of attention from investors who are fond of ESG investing. The fund was established to meet the increasing need for investment products that are sustainable and responsible investment products. Through this article, we want to let the reader to understand all the details of ORFN ETF, from its performance and returns, to its effect on the market after its inception.

Profile of the ORFN ETF

The ORFN ETF has been designed to give the investor access to companies that follow best practices of corporate governance and sustainability. The investment approach of the fund entails the identification of the firms with good stewardship of ESG issues and avoiding certain sectors that are considered negative or unethical. The ETF is designed to have a broad sectoral diversification but would apply sustainability at the same time.

Performance Analysis

Initial Performance

When the ORFN ETF was launched, investors who wanted to invest in ethical funds flocked to it. In the initial months of its operation, the fund was performing very well and was even better than many conventional ETFs. This initial performance can be explained by increasing attention and demand for ESG sustainable investments as well as the appropriate market conditions for ESG companies.

Long-Term Performance

In the long run, the ORFN ETF has also been on an upward trend. Analyzing its performance metrics reveals several key trends:

Annual Returns:

Returns analysis showed that ORFN ETF has been performing well in terms of annual returns against other ETFs. Its performance has also been good especially during the time when ESG investing was on the rise among institutional and retail investors.

Volatility:

ETF has been less volatile as compared to the normal market indices in the past. This could be attributed to the fact that the fund targets companies with good governance structures and stable business models.

Dividend Yield:

Although the main objective for the investment in the ORFN ETF was capital gains, the investment has also offered a small dividend return. These are derived from companies within the portfolio that have had a track record of paying dividends to its shareholders.

Sectoral Performance

The sectoral composition of the ORFN ETF is diverse, with significant exposure to technology, healthcare, and consumer goods. These sectors have been instrumental in driving the fund’s performance:

Technology:

Companies within the technology sector, particularly those focused on renewable energy and sustainable innovations, have been top performers. The shift towards digital transformation and green technologies has positively impacted the fund’s returns.

Healthcare:

Investments in healthcare companies, especially those engaged in providing access to affordable and quality care, have yielded strong returns. The sector’s resilience during market downturns has also contributed to the ETF’s stability.

Consumer Goods:

Sustainable consumer goods companies have been a key area of focus. Firms with sustainable supply chains and eco-friendly products have seen increased consumer demand, reflecting positively on the ETF’s performance.

Comparative Analysis

When compared to traditional ETFs, the ORFN ETF has shown a competitive edge, particularly in terms of risk-adjusted returns. Its Sharpe ratio, a measure of risk-adjusted performance, has consistently been higher than the industry average. This indicates that the ORFN ETF has delivered superior returns per unit of risk taken, making it an attractive option for risk-averse investors.

Challenges and Risks

However, like any other investment vehicle, the ORFN ETF is not devoid of risks and some of the challenges it faces are as follows. Some of the key risks include:

Market Fluctuations:

Like any other equity-based investment the ORFN ETF is vulnerable to market volatility. It may be affected by market conditions such as economic fluctuations that may hinder its operations.

Regulatory Risks:

New rules concerning ESG criteria or investment procedures can influence the fund’s functioning and results.

Sector Concentration:

The ETF is fairly spread out across the sectors, however, a large proportion of exposure to some sectors such as technology exposes the ETF to sector specific risks such as a slump in the technology sector.

Conclusion

Since the inception of the ORFN ETF by Constrained Capital LLC, it has been able to post good performances and returns to make it among the best ESG investment. These factors include, strong investment model, sectoral diversification and its ability to fit into the growing global trend of sustainable and responsible investments. As the ESG investing space steadily grows, ORFN ETF can sustain its growth pattern and be of value to its investors in the future.

You can find more information and updates on the ORFN ETF from the official website of Constrained Capital LLC.

Important Information

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. To view this and other information about the Fund, click to read the prospectus or the summary prospectus. Read the prospectus or summary prospectus carefully before investing.

Investing in ETFs involves risk and there is no guarantee of principal.

Because the Fund is an ETF (rather than a mutual fund), shares are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemable. Owners of shares may acquire those shares from the Fund and tender those shares for redemption to the Fund in Creation Unit aggregations only. Brokerage commissions will reduce returns.

Diversification in an individual’s investment portfolio does not assure a profit.

American Depositary Receipt Risk (ADR). ADRs involve risks like those associated with investments in foreign securities, including changes in political or economic conditions of other countries and changes in the exchange rates of foreign currencies. ADRs listed on U.S. exchanges are issued by banks or trust companies and entitle the holder to all dividends and capital gains paid out on the underlying foreign shares. Investing in ADRs as a substitute for an investment directly in the foreign company shares, exposes the Fund to the risk that the ADRs may not provide a return that corresponds precisely with that of the foreign company’s shares. Concentration Risk. Because the Fund’s investments will be concentrated in a group of industries, to the extent the Index is concentrated, the value of its shares may rise and fall more than the value of shares in a fund invested in a broader range of industries. ESG Orphan Risk. A strategy or emphasis on environmental, social and governance factors (“ESG”) orphaned industries, such as fossil fuel energy, nuclear power, tobacco, weapons/firearms, alcohol and/or gambling, may limit the investment opportunities available to a portfolio. Therefore, the portfolio may underperform or perform differently than other portfolios that do not have an ESG Orphaned industry focus or limitation. New Fund Risk. The Fund is recently organized with no operating history and managed by an Adviser that has not previously managed a registered fund. As such, the Fund has no track record on which to base investment decisions. Non-Diversification Risk. Because the Fund is “non-diversified,” it may invest a greater percentage of its assets in securities of a single issuer or fewer issuers than a diversified fund, which may expose the Fund to the risks associated with the developments affecting the issuers in which the Fund invests. Passive Management Risk. The Fund is passively managed and attempts to mirror the composition and performance of the ESG Orphans Index. The Fund’s returns may not match due to expenses incurred by the Fund or lack of precise correlation with the index.

The Solactive Capital ESG Orphans Index is a representation of companies that have business operations in one of the following industries: alcohol, fossil fuel energy, gaming, nuclear power, tobacco and weapons/firearms. The Index is calculated, administered, and published by Solactive AG, the Index’s administrator.

Constrained Capital, LLC is the owner of the ESG Orphans Index and the sponsor of the Fund.

Toroso Investments, LLC (Toroso) serves as investment adviser to the Fund.

Tidal ETF Services, LLC, a subsidiary of Toroso, serves as the Fund’s launch and structure partner.

The fund is distributed by Foreside Fund Services, LLC