Subversive Capital launched two new ETFs Tuesday that offer investors the chance to mirror the trades being made by members of Congress.
The ETFs are launched in partnership with Unusual Whales, which has been covering the unusual stock trading activity of members of Congress for years. Here are the details.
What Happened: In 2022, the SPDR S&P 500 ETF Trust SPY had its worst-performing year since 2008. That didn’t stop 20% of the members of Congress who traded stocks and options from beating the market, a number that is higher than that of professional money managers over time.
Former Speaker of the House Nancy Pelosi has seen increased scrutiny over the trades made by her husband Paul Pelosi, who is a venture capitalist. Many of the trades disclosed by Pelosi have shown questionable timing ahead of new policy changes and bills from Congress. Pelosi has said publicly that she does not share any information with her husband.
The increased calls to ban members of Congress from trading stocks while in office led to Sen. Josh Hawley (R-MO) recently introducing the PELOSI Act, officially called Preventing Elected Leaders from Owning Securities and Investments Act.
One person leading the call for increased insight and transparency is Unusual Whales, which has provided information for traders since launching in June 2020.
“There were gross inequities in information, education and access for the everyday trader,” the founder of Unusual Whales told Benzinga previously. “Retail [traders] are the future.”
Unusual Whales was one of the first to track the trades of members of Congress with the I Am the Senate section of the website showing their trades and performance.
“A lot of the trades were seemingly around, or as a result of, deals that would not be known to the average trader.”
Unusual Whales highlighted trades disclosed by Pelosi for Amazon.com Inc AMZN before the Pentagon cancelled the JEDI contract for Microsoft Corporation MSFT and buying call options in Tesla Inc TSLA ahead of legislation for electric vehicle credits as being unusual purchases by the former Speaker of the House and her husband.
The tracking of Congress trading activity led to the creation of two new ETFs in partnership with Subversive Capital.
The Congress ETFs: Subversive Capital launched the Unusual Whales Subversive Democratic Trading ETF NANC and the Unusual Whales Subversive Republican Trading ETF KRUZ on Tuesday.
Unusual Whales is the data provider for the ETFs, which will follow the trades made and disclosed by members of Congress. The ETFs have a management fee of 0.75%.
The ETFs will “allow investors to secure returns that their elected representatives enjoy by law,” according to a press release.
“We have partnered with Unusual Whales to develop ETFs that will allow investors access to the approximate holdings of members of Congress in both parties,” portfolio manager Christian Cooper said.
Cooper said members of Congress beat the SPY index in 2021 and 2022.
“We believe members of Congress have more information than the rest of us, and if they can trade on that information, we should be able to do the same, and now we can.”
The top 10 holdings of the Democratic Trading ETF are:
- Microsoft: 7.3%
- Amazon: 6.7%
- Alphabet Inc GOOG: 5.9%
- Apple Inc AAPL: 5.4%
- Salesforce.com Inc CRM: 4.4%
- NVIDIA Corporation NVDA: 3.5%
- The Walt Disney Company DIS: 2.5%
- CrowdStrike Holdings Inc CRWD: 1.0%
- Philip Morris International PM: 0.9%
- United Parcel Service, Inc. UPS: 0.9%
The top 10 holdings of the Republican Trading ETF are:
- Magellan Midstream Partners MMP: 3.4%
- Microsoft: 2.6%
- Energy Transfer LP ET: 2.2%
- Dow Inc DOW: 1.8%
- Cash: 1.8%
- Phillip Morris: 1.6%
- United Therapeutics Corp UTHR: 1.6%
- Las Vegas Sands LVS: 1.5%
- Owl Rock Capital Corporation ORCC: 1.5%
- Accenture PLC CAN: 1.5%
Photo courtesy of Unusual Whales.