Tommy Mancuso

Tommy Mancuso created the BAD ETF , and yes, the name is exactly what you think. BAD stands for Betting, Alcohol, and Drugs (pharmaceuticals), with a cannabis component tucked in alongside. It's a vice-investing thesis wrapped in an anti-ESG framework, and Tommy doesn't apologize for any of it. "We don't think social stigma should be a factor when it comes to investing. At the end of the day, we are investing to make money."

The Anti-ESG Thesis

BAD was born from frustration with ESG scoring. "When you're trying to greenwash some stuff, when you're trying to manipulate the scoring criteria so you can attract a certain side and put a mask on , that's the issue I see with ESG. It's the lack of transparency." Tommy points to the absurdity of finding Exxon in ESG funds: "People are like, I don't want to invest in oil and gas. But look at the holdings , there IS oil and gas in there because on the social and governance side, they're checking the box."

He acknowledges ESG had its run , "2020, 2021, consistently outperforming the S&P" , but argues much of that outperformance was compositional: ESG funds were overweight tech, and tech boomed. "A lot of the social and governance stuff is in the tech world. We know what happened in 2020 , tech boom. That was the first round of cutoffs where people in the 'woke department' were let go." The implication: ESG outperformance was a factor bet on tech disguised as a values-based strategy.

Index Construction: Equal Weight Within Sleeves

The portfolio is structured in three equal sleeves: betting gets roughly 33%, alcohol gets 33%, and drugs/cannabis gets 33%. Within each sleeve, the companies are equally weighted. "If there's 10 companies in betting, each one gets about 3.3%." Cannabis companies are held within the drug sleeve rather than getting their own allocation.

The design is deliberately simple and transparent , you know exactly what you own and why. Each sleeve represents an industry where demand is structurally persistent regardless of economic conditions, which is the core of the recession-resistance argument. There's no proprietary scoring or complex optimization , just three sleeves of vice, equally weighted.

Recession-Resistant, Not Recession-Proof

Brad observes that beyond the anti-ESG positioning, BAD functions as a recession-resistant portfolio. Tommy agrees: "People are going to gamble , in some cases, in recessions, more. Whether that's good for them or bad, I hope they win. People are going to continue to drink. In recessions, sometimes more often than not. People are going to continue to get sick , in some cases, more during periods of financial stress."

"Nothing is recession-proof," Tommy qualifies, "but we do have some recession-resistant characteristics." The thesis is simple behavioral economics: vice industries have inelastic demand. People don't stop gambling, drinking, or needing medication because the economy contracts , and some of these behaviors actually increase under financial stress. The pharmaceutical component provides additional stability since healthcare spending is among the last things consumers and governments cut.

Alcohol Industry Consolidation

Tommy highlights a specific dynamic in the alcohol space worth watching: "We've seen a couple of earnings lately in alcohol companies, and they're starting to get supply chain issues figured out. A lot of these smaller companies , micro breweries, micro ready-to-drinks , don't have the scalability to withstand this type of environment. So the bigger players can acquire them at a discounted price." BAD's focus on larger, established companies within each sleeve positions it to benefit from this consolidation trend rather than being exposed to the smaller players getting squeezed.

The LinkedIn Origin Story

In a funny closing exchange, Brad reveals he found Tommy through LinkedIn , the same platform he hates for its relentless spam. Tommy laughs about the automated follow-up messages: "You know, 'when's a good time?' and they just keep hitting you over and over." Brad admits to sending "snappy ones" back after a few cocktails. It's a reminder that in the small-issuer ETF world, distribution often starts with a cold outreach on a social platform and a willingness to tell your story to anyone who'll listen.

BAD isn't going to be in every advisor's portfolio. It's a niche product with a provocative positioning that will appeal to some investors and repel others. But Tommy's thesis , that vice industries offer structural demand persistence and recession resistance , is grounded in observable human behavior, not just contrarianism. And in a market where ESG funds are facing outflows and scrutiny, there's clearly an audience for the other side of that trade.

The timing of BAD's launch into an environment where anti-ESG sentiment is growing , with multiple states pulling pension assets from ESG-focused managers and the political backlash against "woke investing" gaining momentum , suggests Tommy may have caught a cultural inflection point. The fund doesn't need to win the ESG debate to succeed; it just needs enough investors who want to make a contrarian statement with their portfolio while owning fundamentally recession-resistant businesses. The vice thesis has been around since the original "sin stock" academic research showed outperformance, but BAD packages it in a way that's both investment-grade and culturally provocative.

Key Takeaways

• Tommy Mancuso created the BAD ETF , and yes, the name is exactly what you think.
• It's the lack of transparency." Tommy points to the absurdity of finding Exxon in ESG funds: "People are like, I don't want to invest in oil and gas.
• We know what happened in 2020 , tech boom.
• That was the first round of cutoffs where people in the 'woke department' were let go." The implication: ESG outperformance was a factor bet on tech disguised as a values-based strategy.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.