If you ever wanted to know what stocks Congress members invest in, there’s an ETF for that.
With more than 3,000 different exchange-traded funds (ETFs) in the U.S. alone, investors can find an ETF for just about anything.
Some ETFs even track what members of Congress are investing in, thanks to a database called Unusual Whales.
Unusual Whales is a data provider that tracks what elected officials are investing in through public disclosures, made possible by the Stop Trading on Congressional Knowledge, or STOCK, Act. It also follows the investments of notable figures like Jim Cramer of CNBC, Keith Gill (aka “Roaring Kitty”), and David Portnoy of Barstool Sports.
Asset management firm Subversive uses that data to create two ETFs—one focused on the portfolios of Democrats in Congress and one on the investments of Republicans.
One is beating the other by a wide margin. Let’s take a look.
Subversive Unusual Whales Democratic ETF
Launched in February of 2023, the Subversive Unusual Whales Democratic ETF (CBOE:NANC) invests in stocks purchased or sold by Democratic members of Congress or their spouses. This includes U.S. Rep. Nancy Pelosi (D-CA), whose husband, Paul Pelosi, owns a venture capital firm and to who the ticker (NANC) refers to.
The ETF is heavily invested in big tech, as its largest holdings are NVIDIA (NASDAQ:NVDA), which makes up 13.2% of the portfolio, followed by Microsoft (NASDAQ:MSFT) at 9.2%.
NANC’s other top 10 holdings include Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), Salesforce (NYSE:CRM), CrowdStrike Holdings (NASDAQ:CRWD), and Netflix (NASDAQ:NFLX).
Overall, the ETF currently holds about 750 stocks, including all of those held by Democrats and their families. It is actively managed based on the trades made by Congress members and weighted using a proprietary system that weights stocks by the amount of assets Congress has invested in them. Roughly 54% of the assets are in the top 10 holdings.
The ETF 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 to 25% for the benchmark. As of July 10 it has returned 23% YTD, beating the S&P 500’s 17% gain YTD.
NANC is currently trading at $37 per share and has an expense ratio of 0.75%.
Subversive Unusual Whales Republican ETF
The Subversive Unusual Whales Republican ETF (CBOE:KRUZ) is similar to its Democratic counterpart, except that it invests in only the trades made by Republican members of Congress and their families. The ticker likely refers to U.S. Sen. Ted Cruz (R-TX), whose trades this ETF includes, among others.
As one might guess, the Republican portfolio is much more financially conservative, including many stable, value-oriented stocks among its largest holdings.
The ETF’s largest position is in JPMorgan Chase (NYSE:JPM), but at only 3.3% of the total assets. NVIDIA is second at 2.9% and Comfort Systems (NYSE:FIX), an HVAC company, is at 2.5%.
KRUZ’s other top 10 holdings 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).
There are fewer stocks in this portfolio, with roughly 490 positions at present, but it is more diversified, with only 20% of the assets in the top 10 holdings.
As one might expect, looking at the holdings and knowing our market, the Republican ETF has underperformed. The ETF is trading at about $30 per share and is up about 19% over the past one-year period through June 30. Year-to-date it has returned 12% as of July 10.
In both cases, it underperformed the S&P 500 and the Democratic ETF. It also has a higher expense ratio of 0.83%.
Which is the better ETF?
It should be noted that this is just a one-year sample, as both funds were launched last year. But so far, the Unusual Whales Democratic ETF (NANC) has done a better job of taking advantage of the bull market, loading up 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.
So are either of these ETFs a good buy? It is hard to say with only a one-year track record, but growth investors may flock to the Democratic ETF while value investors may prefer the Republican ETF.
