Can American politics or any politics for that matter influence the share markets? If you have ever pondered this question, read on!
Since the launch of Subversive’s (www.subversiveetfs.com) two Exchange Traded Funds (ETF) in February 2023, it seems that politicians might have inside information available to them. Or are they merely astute investors?
The Unusual Whales Subversive Democratic Trading ETF (NANC) and the Unusual Whales Subversive Republican Trading ETF (KRUZ) mimic the stock picks of opposing sides of the U.S. Congress.
The trading and investing strategies of these funds are based on the premise that members of Congress, such as Nancy Pelosi (Democrat) and Ted Cruz (Republican), have access to non-public information that can influence their investment decisions. By tracking the trades of these insiders and their spouses, the ETF funds aim to capitalise on their potentially advantageous knowledge.
We analyse NANC and KRUZ in the comparison below and have included their investment strategies, fees, assets, top holdings and historical performance to determine if they deserve a slot in an investment portfolio.
Since their launch the two ETFs have outperformed their comparable indices. NANC trades like the S&P and KRUZ like the Dow and their returns were very different. It’s probably not surprising that they are outperforming the market given their potential access to confidential tradeable information.
NANC vs KRUZ Performance Comparison:
NANC & KRUZ have very different portfolio make-ups. The largest holdings in NANC are mostly technology-related companies. In contrast, the top holdings in KRUZ include oil majors and banks. The two funds have over a thousand different individual names between them, but the overlap is almost non-existent. There is a clear line of demarcation on what types of companies fit within each party. The Democrat version is 1% energy where the Republican one is almost 14%.
NANC’s portfolio is tech-focused, expecting US interest rate cuts this year. That is a world in which Kamala Harris wins re-election for the Democrats. But if Donald Trump and the Republicans take power, energy is surely going to be the top performer.
Your political view clearly has an influence on your investing choices – or are they just positioning their investments into sectors that will do well should their respective candidate and party win the November 2024 presidential election?
The Composition of the NANC ETF
NANC is the stock symbol for the Unusual Whales Subversive Democratic Trading ETF, an exchange-traded fund that seeks to invest in equity securities purchased by Democratic members of the US Congress and their spouses. According to Subversive, the fund will not consider investments by any U.S. Congressperson who is not registered as a member of the Democratic Party, or their spouse.
The NANC symbol derives from Nancy Pelosi (Democrat from California), who along with her husband Paul, is known for making winning stock picks, such as Nvidia Corp (NVDA), which is up over 200% in the past year.
NANC ETF – Top 10 Holdings:
The Composition of the KRUZ ETF
KRUZ is the symbol for the Unusual Whales Subversive Republican Trading ETF, which is a fund that tracks the stock purchases made by Republican members of the U.S. Congress and their spouses.
According to Subversive, the fund will not consider investments by any U.S. Congressperson who is not registered as a member of the Republican Party, or their spouse. The KRUZ stock symbol derives from Ted Cruz (Republican from Texas), whose trades are among the most watched in Congress.
KRUZ ETF – Top 10 Holdings:
The NANC and KRUZ ETFs offer an unconventional way to invest in the U.S. stock market. However, due to their recent launch and the inherent uncertainty of their underlying strategies, careful consideration is essential before investing in either of these funds.
As with any investment security, past performance is not necessarily indicative of future results. There’s no guarantee that following US congressional trades will lead to superior investment returns compared to a broader market approach, the effectiveness of this strategy remains to be seen. Furthermore, the politicians’ trade data is several weeks old by the time Subversive and investors see the latest stock picks.
As always, it’s wise for investors to weigh the potential benefits against the risks and how they may align with their investment goals, risk tolerance, personal goals and objectives.
