
Should investors bet against DEI? What to know about new anti-'woke' index fund
That is the proposed selling point of a new index fund launching Tuesday: The exchange-traded fund mirrors the S&P 500 but excludes 37 companies that engage in DEI.
It is the brainchild of James Fishback, an ally of President Donald Trump who used to work for the hedge fund Greenlight Capital and recently became more widely known as the Department of Government Efficiency adviser who proposed sending taxpayers stimulus checks. Last week, Fishback launched a Trump super PAC to back the president in his feud with the GOP's largest individual donor and former DOGE architect Elon Musk.
With the Azoria 500 Meritocracy ETF, Fishback is piggybacking on the Trump-powered DEI backlash. He unveiled his plans in December at the president's Mar-a-Lago resort.
'I am making the bet of my career that, generally, stocks that hire on skill and merit and not on race and gender will do better,' Fishback, CEO and founder of investment firm Azoria, told USA TODAY in an exclusive interview. 'The next couple years are going to decide if this strategy is a success.'
Is anti-DEI a good investment?
Morningstar analyst Bryan Armour said he expects some investors will flock to the index fund which trades under the ticker symbol SPXM.
'Investors are often drawn to the siren song of a good narrative, especially one that speaks to their views,' Armour said. 'My guess is there will be some appetite for an ETF like this.'
But, he said, investors are best off "separating investing and politics.'
Exchange-traded funds, or ETFs, are bundles of stocks that trade on public exchanges like individual stocks, giving investors the ability to buy hundreds of securities in a single purchase. Anyone with a brokerage account can put money in ETFs, which can be bought and sold like shares during the trading day.
Ideologically driven S&P 500 trackers tend to charge high fees and attract meager investment, University of Florida finance professor Jay Ritter told USA TODAY in December.
'We will probably see some more anti-'woke' ETFs but only the biggest will survive,' Ritter said. 'Each year, a lot of small ETFs get closed or merged because there is not enough liquidity to attract investors and cover the costs of managing the ETF.'
Is there a DEI 'drag' on stocks?
Fishback told USA TODAY his index fund filters out more than three dozen companies that use explicit race and gender quotas in hiring decisions including Nike, Airbnb and Intel. Airbnb and Nike declined to comment.
In a statement, Intel said its hiring and promotion practices "follow a competitive and fair process in compliance with the law and we do not use identity based quotas.'
Initially, Fishback thought the announcement of his S&P 500 tracker would put pressure on the nation's largest companies to roll back these policies, but in conversations with business leaders, Fishback said he discovered they 'genuinely believe that their DEI hiring targets help their long-term business" and few could be persuaded to make changes.
'I thought a lot more companies would have taken these policies off the table," he said. "But the fact that six months later, there are still three dozen companies hiring on race and gender tells me that this product has to be there."
The Florida investment fund manager said his research shows a 'DEI drag' has caused these 37 stocks to underperform for the last two years.
"We identified DEI hiring targets as the likely driver of underperformance by studying a diverse set of 37 companies across 26 industries that share little in common except for one policy: explicit, quantitative DEI hiring targets. This uniformity allowed us to isolate that variable as a common denominator," Fishback said.
On average, the companies saw their stocks rise 3.8% in the 30 days after dropping diversity hiring targets, compared to the S&P 500's average monthly return of 1.24%, according to Fishback.
"Our research demonstrates a strong negative association between explicit demographic hiring targets and stock returns," he said.
Analysts were skeptical.
'I find it hard to believe that DEI hiring practices can be directly linked to stock underperformance,' Armour said.
The Azoria 500 Meritocracy ETF charges a management fee of 0.47%, meaning if an investor puts in $10,000, they will have paid approximately $48 in fees to the fund manager after one year.
Even if diversity targets were the common denominator, the omitted companies would need to "underperform by a lot" to make the fund a worthwhile investment when an investor can buy an S&P 500 fund "for three basis points of fees or less," Armour said.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
2 minutes ago
- Yahoo
Trump pauses export controls to bolster China trade deal, FT says
(Reuters) -The U.S. has paused curbs on tech exports to China to avoid disrupting trade talks with Beijing and support President Donald Trump's efforts to secure a meeting with President Xi Jinping this year, the Financial Times said on Monday. The industry and security bureau of the Commerce Department, which oversees export controls, has been told in recent months to avoid tough moves on China, the newspaper said, citing current and former officials. Reuters could not immediately verify the report. The White House and the department did not respond to Reuters' requests for comment outside business hours. Top U.S. and Chinese economic officials are set to resume talks in Stockholm on Monday to tackle longstanding economic disputes at the centre of a trade war between the world's top two economies. Tech giant Nvidia said this month it would resume sales of its H20 graphics processing units (GPU) to China, reversing an export curb the Trump administration imposed in April to keep advanced AI chips out of Chinese hands over national security concerns. The planned resumption was part of U.S. negotiations on rare earths and magnets, Commerce Secretary Howard Lutnick has said. The paper said 20 security experts and former officials, including former deputy US national security adviser Matt Pottinger, will write on Monday to Lutnick to voice concern, however. "This move represents a strategic misstep that endangers the United States' economic and military edge in artificial intelligence," they write in the letter, it added.


The Hill
3 minutes ago
- The Hill
Asian shares are mixed after Wall Street sets more records for US stocks
BANGKOK (AP) — Stock markets in Asia were mixed on Monday after U.S. stocks rose to more records as they closed out another winning week. U.S. futures and oil prices were higher ahead of trade talks in Stockholm between U.S. and Chinese officials. European futures rose after the European Union forged a deal with the Trump administration calling for 15% tariffs on most exports to the U.S. The agreement announced after President Donald Trump and European Commission chief Ursula von der Leyen met briefly at Trump's Turnberry golf course in Scotland staves off far higher import duties on both sides that might have sent shock waves through economies around the globe. Tokyo's Nikkei 225 index lost 1% to 41,056.81 after doubts surfaced over what exactly the trade truce between Japan and U.S. President Donald Trump, especially the $550 billion pledge of investment in the U.S. by Japan, will entail. Terms of the deal are still being negotiated and nothing has been formalized in writing, said an official, who insisted on anonymity to detail the terms of the talks. The official suggested the goal was for a $550 billion fund to make investments at Trump's direction. Hong Kong's Hang Seng index gained 0.4% to 25,490.45 while the Shanghai Composite index lost 0.2% to 3,587.25. Taiwan's Taiex rose 0.3%. CK Hutchison, a Hong Kong conglomerate that's selling ports at the Panama Canal, said it may seek a Chinese investor to join a consortium of buyers in a move that might please Beijing but could also bring more U.S. scrutiny to a geopolitically fraught deal. CK Hutchison's shares fell 0.6% on Monday in Hong Kong. Elsewhere in Asia, South Korea's Kospi was little changed at 3,195.49, while Australia's S&P/ASX 200 rose 0.3% to 8,688.40. India's Sensex slipped 0.1%. Markets in Thailand were closed for a holiday. On Friday, the S&P 500 rose 0.4% to 6,388.64, setting an all-time for the fifth time in a week. The Dow Jones Industrial Average climbed 0.5% to 44,901.92, while the Nasdaq composite added 0.2%, closing at 21,108.32 to top its own record. Deckers, the company behind Ugg boots and Hoka shoes, jumped 11.3% after reporting stronger profit and revenue for the spring than analysts expected. Its growth was particularly strong outside the United States, where revenue soared nearly 50%. But Intell fell 8.5% after reporting a loss for the latest quarter, when analysts were looking for a profit. The struggling chipmaker also said it would cut thousands of jobs and eliminate other expenses as it tries to turn around its fortunes. Intel, which helped launch Silicon Valley as the U.S. technology hub, has fallen behind rivals like Nvidia and Advanced Micro Devices while demand for artificial intelligence chips soars. Companies are under pressure to deliver solid growth in profits to justify big gains for their stock prices, which have rallied to record after record in recent weeks. Wall Street has zoomed higher on hopes that President Donald Trump will reach trade deals with other countries that will lower his stiff proposed tariffs, along with the risk that they could cause a recession and drive up inflation. Trump has recently announced deals with Japan and the Philippines, and the next big deadline is looming on Friday, Aug. 1. Apart from trade talks, this week will also feature a meeting by the Federal Reserve on interest rates. Trump again on Thursday lobbied the Fed to cut rates, which he has implied could save the U.S. government money on its debt repayments. Fed Chair Jerome Powell has said he is waiting for more data about how Trump's tariffs affect the economy and inflation before making a move. The widespread expectation on Wall Street is that the Fed will wait until September to resume cutting interest rates. In other dealings early Monday, U.S. benchmark crude oil gained 24 cents to $65.40 per barrel. Brent crude, the international standard, also added 24 cents to $67.90 per barrel. The dollar rose to 147.72 Japanese yen from 147.71 yen. The euro slipped to $1.1755 from $1.1758.

Business Insider
4 minutes ago
- Business Insider
Mark Cuban said the Trump administration needs to crack down on ads in AI models
"Shark Tank" star Mark Cuban said on Saturday that the White House should "make it illegal for AI models to offer advertising." Cuban said in an X post addressed to David Sacks, the White House's AI and crypto czar, that the administration should "examine referral fees as well." "The last thing we need is to have algorithms designed to maximize revenue driving LLM output and interactions," Cuban wrote. "They are already recommending brands and we don't know if they are getting paid for it. We need to have learned our lessons from algos in social media," he added. Cuban said in a subsequent post on Saturday that he would be willing to accept advertising on AI models if they are "identified as an ad" and kept "completely independent from the user generated chats." Cuban's proposal comes just days after the Trump administration unveiled its 28-page " AI Action Plan" on Wednesday. Back in January, President Donald Trump had signed an executive order calling for "existing AI policies and directives that act as barriers to American AI innovation" to be revoked. Trump has adopted a relatively light-touch approach toward AI regulation compared to his predecessor, President Joe Biden. In October 2023, Biden signed an executive order demanding greater transparency from companies developing AI tools. Trump's new "AI Action Plan" proposed withholding federal funding from states that want to impose "burdensome" AI regulations. Cuban and the White House did not respond to requests for comment from Business Insider. Social-media déjà vu Cuban's worries may not be unfounded. Major AI players such as have been deepening their leadership bench with former executives from social media platforms like Facebook and Instagram. In May, OpenAI chief Sam Altman said he had hired Fidji Simo, the CEO and chair of Instacart, to serve as OpenAI's new CEO of applications. Before she joined Instacart, Simo worked at Meta, where she oversaw Facebook's app and advertising products. Last year, OpenAI hired Kevin Weil as its chief product officer. Weil was previously vice president of product at Instagram and senior vice president of product at Twitter. OpenAI's rival, Anthropic, made a similar move in May 2024 when it hired Mike Krieger, cofounder and former CTO of Instagram, as its chief product officer. Cuban has long warned about the risks and dangers that could come with AI tools like chatbots. He told comedian Jon Stewart in a podcast interview that aired in 2023 that online misinformation "is only going to get worse" with the proliferation of AI tools. "Once these things start taking on a life of their own, it will be difficult for us to define why and how the machine makes the decisions it makes, and who controls the machine," Cuban said. Last week, Cuban wrote in an X post that he expects AI companies to hoard talent and intellectual property to stay ahead of their competitors. "If you create valuable IP, encrypt and silo it. Let companies bid on it. Or just use it for your own behind a paywall model. IP is KING in an AI world," Cuban wrote on July 20.