Members of Congress buy and sell stocks. These ETFs let you invest like Democrats or Republicans.

Whether you want to invest like Nancy Pelosi or Ted Cruz, you can. But maybe you shouldn’t.

Politicians are like us (in a way). They buy cars like us and eat out like us, and they often buy and sell stocks, like us. (Of course, they sometimes do so with what some would consider inside information, which would make their trading problematic.) But much of their trading is probably due simply to their optimism or pessimism about the prospects of various companies.

Some members of Congress have also done quite well, even records triple-digit gains Last year. If all this has you wondering what they’re buying and selling and whether you could invest in the same way, you can. Here’s how and why you might not want to.

Image source: Getty Images.

Discover two new ETFs

For those interested in investing alongside members of Congress (and their spouses, in particular), there are two relatively new initiatives exchange traded funds (ETFs) to consider, based on data from Unusual Whales:

• Unusual Whales Subversive Democratic Trading ETF (NANC 0.14%)
• Unusual Whales Subversive Republican Trading ETF (CROSS -1.48%)

Yes, their ticker symbols intentionally evoke Rep. Nancy Pelosi and Sen. Ted Cruz. The ETFs were launched fairly recently, in early 2023, so they don’t have much of a track record.

Under the Stop Trading on Congressional Knowledge (STOCK) Act of 2012, members of Congress are required to file periodic transaction reports (PTRs) detailing their purchases, sales, or exchanges of most securities valued at more than $1,000. Spouses and dependent children are also often subject to these requirements.

Comparison of the two ETFs

Both ETFs use the information in these reports to determine which stocks to buy (or sell). Here are the top recent holdings for each:

Top Holdings of the Democratic ETF

Weighting in ETF

Data source: Morningstar.com.

Top Republican ETF Holdings

Weighting in ETF

Data source: Morningstar.com.

The Democratic ETF recently had 718 holdings, compared to 444 for the Republican ETF. The Democratic ETF was heavily weighted toward technology stocks, placing nearly 47% of its assets in The Magnificent Seven and others. (The next largest sectors were consumer discretionary and communication services.) Technology was also the top sector for the Republican ETF, but with just 23% of assets, followed by industrials, financials, energy and healthcare, each with more than 10%.

The Democratic ETF has been called more growth stock investment and the republican more value-driven 1. Another observation is that the former is more focused on information and ideas and the latter more on things.

How have these trends served the ETFs? Well, remember, they don’t really have a long enough track record to draw conclusions, but over the past year, the Democratic ETF has gained 34%, more than the Republican ETF’s 21%.

Should you invest in these ETFs?

Given all of this, and perhaps your political beliefs, should you invest in one or both of these ETFs? In my opinion, the answer is no, not at all. Here’s why:

• They’re too young and too small. The Democratic ETF recently held just $126 million in assets, compared to $25 million for the Republican ETF. They’re also thinly traded, meaning relatively few shares change hands each day. So if and when you want to buy or sell, there will be relatively few investors to trade with, and you may not be able to get the best price.
• Their expense ratios (annual fees), while small (0.76% for Democrats and 0.83% for Republicans), will still weigh heavily on your returns. Many index ETFs often charge 0.1% or much less.
• It’s one thing to try to mimic the moves of big investors, but even if these politicians are very good at legislating (and there is certainly little consensus on that), that doesn’t mean they know which stocks will be the long-term winners.
• Every investor has different needs, goals, and preferences. If you want to be a great long-term investor, investing in great companies for the long term, you may find yourself moving in and out of many companies too frequently with this type of investing.

The most compelling reason to avoid these ETFs, to me, is simply that there are much more attractive ETFs to consider, some of which have posted double-digit gains for many years. Other ETFs have lower expense ratios, more promising investment strategies, and better track records. For many of us, a simple broad market ETF will serve us best.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Selena Maranjian has positions in Alphabet, Amazon, Apple, Arista Networks, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Arista Networks, JPMorgan Chase, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a position in Alphabet, Amazon, Apple, Arista Networks, JPMorgan Chase, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. disclosure policy.

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