Like many Americans, Perth Tolle has watched the recent protests in Hong Kong with dismay. Tolle, who divided her childhood between Texas and mainland China, spent a year in Hong Kong after college. That year, she made friends with a Chinese woman, a relationship that helped Tolle realize just how lucky she’d been to spend so much of her childhood in a free country.

“Because of the one-child policy, she did not exist on paper, she had no birth certificate, no social benefits, no registration to receive official documents,” Tolle said. “That made me realize that governance and policies matter. This policy changed the culture, society, and economy of an entire generation in China. It made me realize freedom has an impact.”

Back in the U.S. and settling into a job as a financial adviser at Fidelity Investments, Tolle wanted to do something about her ideas. Even as she learned about investing in “emerging markets,” she chafed at sending dollars to China.

“Eventually the idea came to me: I want to invest in free countries,” she said. “It’s freedom that allows the emerging markets of yesterday to become the developed markets of today.”

Now, nearly two decades later, Tolle’s passion is an investable idea. In May, a company she founded, Life + Liberty Indexes, launched an exchange-traded fund to allow anyone access to its strategy: “Human and economic freedom metrics as primary factors in the investment selection process.”

At at time when human freedoms seem to be on the retreat, including protests in Hong Kong and Russia, among them and societies are becoming less open, investing in the Freedom 100 Emerging Markets ETF may be the ultimate example of trying to do well financially by doing good.

Like most ETFs, this one FRDM, -1.70%   tracks an index. It’s called Life + Liberty Freedom 100 Emerging Markets Index, and Tolle developed it using data from a few sources, including the Fraser Institute, the Cato Institute and the Germany-based Friedrich Naumann Foundation for Freedom. Its benchmark is the MSCI Emerging Markets Index.

‘It’s freedom that allows the emerging markets of yesterday to become the developed markets of today.’

Perth Tolle

Right now, the index has by far the most exposure to Taiwan, which makes up nearly one-quarter of its holdings. Securities in South Korea, Poland and Chile are right behind, with about 15%-17% exposure each. According to the Life + Liberty strategy, it’s how free a country is, rather than its market size, that determines how much of the index it makes up.

Tolle is pragmatic when asked how she’d define success for the ETF. So far it’s gathered enough assets to be “past the risk of closure.” But it will take more inflows to become profitable – about $50 million is the usual industry benchmark, and the fund currently has about $12 million. And in its short lifespan of about three months, it’s gained about 3%, according to Alpha Architect, the fund issuer.

Life + Liberty is also similar to other ETFs in that it “rebalances” every so often — in this case, once a year — based on what’s going on in the world.

“Things can change both very slowly and very quickly,” Tolle said. “The top four have always been the top four. The bottom holdings change faster.” The index methodology has one important rule: if a country’s freedom ranking declines too quickly, it will be removed from the index. In the index’s short life, that’s already happened once: in 2018 Turkey’s freedom measurements took such a steep nose-dive in the aftermath of a failed coup that the country was booted.

Read the rest of Andrea Riquier’s article at MarketWatch