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Democrats Dominating Congress Stock Picking, Says ETF Tracking
A recent finding suggests that Democrats in Congress excel in stock picking with a tech-centric portfolio. Two exchange-traded funds (ETFs) – NANC and KRUZ- track the portfolios of lawmakers allowing anyone with a brokerage account to invest in what they are holding at any given moment. These were developed by Unusual Whales and Christian Cooper, the portfolio manager at Subversive Capital, to bring attention to the matter of lawmaker stock trading. Reports state that the portfolios of left-leaning lawmakers performed better than their GOP counterparts and the overall stock market, with Democrats earning returns of 5.4% over four months, in comparison to the S&P 500’s 3.2%.
The ETFs NANC and KRUZ
The two ETFs, NANC and KRUZ, track the portfolios of Democrat and Republican lawmakers and their families, which allow anyone with a brokerage account to invest in them. Christian Cooper, the portfolio manager at Subversive Capital, created these ETFs with Unusual Whales to draw attention to the issue of lawmaker stock trading.
Democrats Outperforming GOP Counterparts
The ETF tracking suggests that left-leaning lawmakers in Congress are outperforming both the stock market and their GOP colleagues. The Democrats have earned returns of 5.4% over just four months, higher than the S&P 500’s 3.2%. GOP portfolios are down over 2%, according to reports from Unusual Whales.
Why Democrats are Taking the Lead
The divergence in the portfolios of Democrats and Republicans is because of their different preferences; Democrats tend to focus more on the future and technology, as demonstrated by their current top holdings of Microsoft, Amazon, Alphabet, Apple, and chipmaker Nvidia. Whereas the top GOP holdings include Accenture, Energy Transfer LP, Shell, Philip Morris, and Elevance Health. However, Cooper notes that had the ETF existed last year, Republicans would have beaten their colleagues because of the jump in the energy sector of nearly 60%.
Lawmakers’ Public Disclosure Filings
The returns this year are calculated from the public disclosures files required by law. The returns in both portfolios are less a result of any day trading by lawmakers, who appear less likely to trade as scrutiny of their activity grows. Cooper notes that they’re generally trading less than before. There are still calls for Congress to ban any type of trading by members – there are at least five bills that have been introduced in this Congress that would levy a ban on lawmaker trading. These efforts aim to update the current rules, which have been in place since the insider trading laws applied to lawmakers in 2012.
FAQ
What are the names of the ETFs involved in tracking the Congress portfolios?
The two ETFs are named NANC and KRUZ. They allow anyone with a brokerage account to invest in what Democrat and Republican lawmakers (as well as their families) are holding at any given moment.
What is the reason behind Democrats outperforming GOP counterparts in stock picking?
The reason is their difference in preference. Democrats tend to focus more on the future and technology, whereas the top holdings of GOP include Energy Transfer LP, Shell, Philip Morris, and Accenture.
What is the reason for lawmakers’ reduced trading activity?
The return in both portfolios is a result of public disclosure files required by law, which are less a result of any day trading by lawmakers. A significant contingent of lawmakers are still pushing to get the number of lawmaker trades to zero. This comes from scrutiny of their activity growing, which makes them less likely to trade.
What restrictions are proposed for lawmakers trading?
Those trade disclosures, along with annual financial reports, allow NANC and KRUZ ETFs to exist by allowing a near-real-time look at lawmakers portfolios. There are at least five bills that have been introduced this Congress that would levy a ban on lawmaker trading. These efforts aim to update the current rules, which have been in place since the insider trading laws applied to lawmakers in 2012.
What is the expectation for lawmakers trading in the future?
ETFs’ creator, Cooper, expects the ETFs not to go anywhere anytime soon and pegs the chances of Congress policing itself with a ban at “near zero”. He hopes for greater restrictions, such as a shorter reporting window and bigger fines for lawmakers who break the rules.
Conclusion
Reports show that the best stock pickers in Congress are Democratic lawmakers, who have a tech-centric portfolio. They are outperforming their GOP counterparts and the overall stock market. The ETF tracking the portfolios, NANC, and KRUZ, were created to draw attention to the issue of lawmaker stock trading. Though calls have grown to ban any type of trading by members, lawmakers are trading less because of growing scrutiny. However, changes are being proposed, such as a shorter reporting window and bigger fines for lawmakers who break the rules.
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