Investing in “innovation” has become a buzzword of sorts, as witnessed by the small but growing roster of exchange-traded funds focused on investing in companies linked to innovative and/or disruptive sectors and technologies.

And that lineup adds a new member with today’s launch of The Future Fund Active ETF (FFND), a fully transparent, actively managed product from The Future Fund LLC, a Chicago-based registered investment advisor whose two principals have a combined half-century of experience in fundamental research and active management at firms that include Goldman Sachs Asset Management and Northern Trust Global Investments.

“We’re looking for companies we believe could change the world. It’s not disruptive technology per se, it’s more about innovative technology,” said David Kalis, partner at The Future Fund. He and the firm’s managing partner, Gary Black, oversee the fund. In addition to the new ETF, they also manage secular growth portfolios for clients in both a long‐only and a hedged-equity structure.

The Future Fund Active ETF contains up to 50 companies focused on what fund managers believe are 10 key secular megatrends that run the gamut from climate change and information management to medical technology and lifestyle improvements.  No single position will comprise more than 10% of the portfolio.

“We’ll put together a portfolio following 10 megatrends, and we’re making sure we’re not buying stocks that track each other with too much correlation,” Kalis explained. “We look at valuations over three- and five-year periods like all growth managers do, but we diversify the portfolio to make sure we’re not paying up for stocks regarding how much we think they’re worth.”

In addition, the fund managers may use “opportunistic hedging” to short the securities of companies they believe will be negatively impacted by emerging secular trends, or which have a combination of weakening fundamentals and excessive valuation.

“Shorting won’t be more than 10% of the portfolio,” Kalis said. “As we look for innovative companies, there will be some companies negatively impacted by [certain secular trends].”

For example, he noted, the fund could go long certain e-commerce stocks and go short brick-and-mortar retailers.

The Future Fund Active ETF charges an expense ratio of 1.01%.