ETFs
2 ETFs That Copy How Members of Congress Invest
If you’ve ever wanted to know what stocks members of Congress are invested in, there’s an ETF for that.
With over 3,000 different exchange-traded funds (ETFs) in the United States alone, investors can find an ETF for just about anything.
There are even ETFs that track the investments of members of Congress, thanks to a database called Unusual whales.
Unusual Whales is a data provider that tracks elected officials’ investments through public disclosures, made possible by the Stop Trading on Congressional Knowledge, or STOCK, Act. It also tracks the investments of celebrities such as CNBC’s Jim Cramer, Keith Gill, aka “Roaring Kitty,” and David Portnoy of Barstool Sports.
An asset management firm called Subversive is using this data to create two AND F — one focused on the portfolios of Democrats in Congress, and the other on the investments of Republicans.
One beats the other by a long shot. Let’s take a closer look.
Democratic ETF Subversive Unusual Whales
Launched in February 2023, the Democratic ETF Unusual and subversive whales (CBOE:NANC) invests in stocks bought or sold by Democratic members of Congress or their spouses. This includes U.S. Representative Nancy Pelosi (D-CA), whose husband Paul Pelosi owns a venture capital firm and to whom the ticker symbol NANC refers.
The FNB The fund invests heavily in large technology companies, with its top holdings being NVIDIA (NASDAQ:NVDA), which accounts for 13.2% of the portfolio, followed by Microsoft (NASDAQ:MSFT) at 9.2%. The other top 10 holdings are Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), Salesforce (NYSE:CRM), CrowdStrike Holdings (NASDAQ:CRWD) and Netflix (NASDAQ:NFLX).
Overall, it is currently holds approximately 750 sharesincluding all stocks in which Democrats and their families invest. It is actively managed, based on transactions made by members of Congress, and weighted using a proprietary system that weights stocks based on the amount of assets invested by Congress. About 54% of the assets are in the top 10 positions.
The stock is trading at $37 per share and has an expense ratio of 0.75%.
THE FNB The index has a short track record but has performed well, beating the S&P 500 with a one-year return of 32% as of June 30, compared with 25% for the benchmark. Year-to-date, as of July 10, it has returned 23%, outpacing the S&P 500’s year-to-date gain of 17%.
Unusual Subversive Whales Republican ETF
THE Unusual Subversive Whales Republican ETF (CBOE:KRUZ) is similar to its Democratic counterpart, except that it invests only in trades made by Republican members of Congress and their families. The ticker likely refers to U.S. Senator Ted Cruz (R-TX), whose trades are included in this ETF, among others.
As you might guess, the Republican portfolio is much more conservative, including many stable and value-oriented stocks among its largest holdings.
The largest position is held by JPMorgan Chase (NYSE:JPM), but with just 3.3% of total assets. NVIDIA is second with 2.9% and Comfort Systems (NYSE:FIX), an HVAC company, with 2.5%. Other top 10 positions include United Therapeutics (NASDAQ:UTHR), Intel (NASDAQ:INTC), Arista Networks (NYSE:ANET), Elevance Health (NYSE:ELV), National Fuel Gas (NYSE:NFG), Texas Instruments (NASDAQ:TXN) and Shell (NYSE:SHEL).
This portfolio contains fewer stocks, with around 490 positions currently, but it is more diversified with only 20% of assets in the top 10 positions.
As expected, looking at the holdings and knowing the market we are in, the Republican ETF underperformed. The FNB trades at about $30 per share and is up about 19% in the past one-year period through June 30. It has returned 12% year-to-date as of July 10.
In both cases, it underperformed the S&P 500 and the Democratic ETF. Its expense ratio is also higher, at 0.83%.
What is the best ETF?
It’s worth noting that this is only a one-year sample, as both funds were launched last year. But so far, the Unusual Whales Democratic ETF has been more successful in taking advantage of the bull market, focusing on tech and AI stocks.
That’s not to say the Republican ETF won’t be better in the long run, as it should be less volatile and not react as much to market fluctuations. Only time will tell.
Are either of these ETFs a good buy? It’s hard to say with just a one-year track record, but growth investors might gravitate toward the Democratic ETF while value investors might prefer the Republican ETF.