Hurricane Ian recovery efforts boost ProcureAM's FEMA ETF

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An exchange-traded fund launched back in June may offer investors an opportunity to capitalize on Hurricane Ian recovery efforts. 

The Procure Disaster Recovery Strategy ETF, which trades under the ticker symbol FEMA, tracks the equal-weighted VettaFi Natural Disaster Recovery and Mitigation Index, which follows a portfolio of about 60 companies engaged in recovering from natural disasters, such as hurricanes, wildfires, floods or earthquakes.
 

The portfolio includes companies with government contracts that have aided in natural disaster relief or mitigation within the last five years, that are in the "home improvement sub-industry" and are engaged in the development and production of emergency/backup power generators and batteries. 

Sectors covered include engineering and construction, specialty industrial machinery, building materials, building products & materials, industrial products, and waste management, among others.


VettaFi's index is rebalanced on a quarterly basis in March, June, September and December, and is reconstituted on an annual basis in March.

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ProcureAM founder and CEO Andrew Chanin told FOX Business that the Procure Disaster Recovery Strategy ETF could be an attractive investment to individuals who live in regions with a higher risk for natural disasters, hedge funds looking for a potential tactical trade with looming natural disasters, or insurance companies looking to hedge some of their own balance sheet risks. 

As of the time of publication, the ETF has climbed more than 2% in the past five days. However, the fund is down more than 13% year to date.

As of October 5, its top five holdings include Tokyo's Fujitsu Limited, ICF International Inc., Sulzer AG, Arcadis NV and John Wood Group PLC. Other notable holdings include Lowe's, Home Depot, Generac, Maxxar, REV Group Inc., Clean Harbors Inc. and Great Lakes Dredging & Dock Corporation.

"Natural disasters are something that are global phenomenons. They can happen anywhere with varying types of damages," Chanin said. "So in order to create a fund with providing exposure to companies that help for the various parts of the natural disaster lifecycle, it made sense to have a global approach to companies that were doing things in the area of natural disaster prevention."

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According to the National Centers for Environmental Information, the U.S. has sustained 332 weather and climate disasters since 1980, costing over $2.275 trillion.

An April analysis by the Office of Budget Management (OMB) estimated that under current policies, climate change could reduce U.S. GDP by 3% to 10% by the end of this century. At the upper end of the range, climate change could lead to an annual federal revenue loss of 7.1% at the end of the century, or $2 trillion per year. 

The OMB also noted that the federal government could spend between an additional $25 billion to $128 billion annually on coastal disaster relief, flood insurance, crop insurance, healthcare insurance, wildland fire suppression and flooding at federal facilities.

The United Nations projects that the number of disaster events across the globe could reach 560 per year – or 1.5 each day – by 2030.

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While some companies have donated money to Hurricane Ian relief efforts, Chanin argues that the private sector can also help with the recovery through on-the-ground efforts like providing vital services requested by FEMA and other municipalities, building up seawalls and helping to install better drainage capabilities to deal with flooding. 

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A local worker cleans debris in downtown Saint Petersburg after Hurricane Ian passed through the area on Sept. 29, 2022 in Saint Petersburg, Florida. | Getty Images

He emphasized that the private sector companies leading Hurricane Ian recovery efforts should be recognized for helping affected individuals get back to their way of life. 

"Far too often, people may group these types of companies in with more opportunistic types of ventures that are more focused on price gouging to take advantage of a short term opportunity," Chanin explained. "These are the companies that are trying to build long term sustainable defenses and recovery efforts for our communities in the greatest times of need. And I think it's so important that people view them with that perspective, because without them, we'd likely be in a much worse place in the wake of natural disasters."