The rise of politically aligned ETFs allows investors to put their money into companies and funds that align with their personal or political beliefs. As the U.S. gears up for another election cycle in less than a month, a new breed of politically focused ETFs is gaining traction: Unusual Whales Subversive Democratic Trading ETF (NANC) and Unusual Whales Subversive Republican Trading ETF (KRUZ).
The concept of political ETFs is not new, though it has evolved over time. The first notable political ETFs debuted in 2017, with the Point Bridge America First ETF (MAGA) and a month later, the EventShares Republican Policies Fund (GOP) and Democratic Policies Fund (DEMS).
GOP and DEMS sought to capture the potential impact of policy-driven events. However, despite initial interest, these funds struggled to maintain momentum. By 2018, EventShares GOP and DEMS were liquidated, and their strategies were folded into the EventShares U.S. Policy Alpha ETF (PLCY). This rebranding was an attempt to create a broader, policy-driven fund, but confusion over the funds’ political associations led to low asset growth, ultimately resulting in PLCY’s closure.
Today, several politically themed ETFs remain available. On the Republican side, the first political ETF, the Point Bridge America First ETF MAGA remains, focuses on companies with a strong history of donations to Republican candidates. The American Conservative Values ETF (ACVF), launched in October 2020, focuses on conviction that politically active companies negatively impact their shareholder returns, as well as support issues and causes that conflict with conservative political ideals, beliefs and values. With $110 million in AUM, ACVF is one of the most popular politically charged ETFs, as of Oct 15, 2024. Similarly, God Bless America ETF (YALL), launched couple years later in October 2022, similarly targets companies perceived to prioritize liberal social agendas over shareholder returns, and has $82 million in AUM, as of Oct 15, 2024.
On the left side, the Democratic Large Cap Core ETF (DEMZ), launched in November 2020, takes the opposite approach, only including companies that have contributed at least 75% of their political donations to Democratic candidates or causes. DEMZ manages $37 million in AUM, as of Oct 15, 2024.
The latest evolution in political ETFs comes from the infamous data provider, Unusual Whales, who gained a cult following from their X account, exposing politicians on their savvy stock trades. Instead of focusing on the political leanings of companies, Unusual Whales Subversive Democratic Trading ETF (NANC) and Unusual Whales Subversive Republican Trading ETF (KRUZ) track stock trades made by members of Congress and their spouses.
These ETFs accomplish this by analyzing required disclosures from the Stop Trading on Congressional Knowledge Act (STOCK Act). This 2012 legislation mandates that members of Congress disclose their trades within 30 days, aiming to increase transparency and prevent insider trading.
These ETFs offer investors a way to align their portfolios with the actions of elected officials, based on the belief that members of Congress may have unique insights into market trends and policy impacts. By following these trades, investors can gain exposure to sectors and companies that may benefit from policy decisions and legislative developments.
As the political landscape continues to influence public discourse, politically focused ETFs are likely to remain relevant for investors looking to align their financial decisions with their values. These funds offer a unique opportunity to merge politics and investing, providing investors with innovative strategies in a constantly evolving market.
Important Information
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