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- Subversive Capital Advisor and Unusual Whales launched ETFs that track the portfolios of Democratic and Republican lawmakers.
- Many members of Congress have outperformed the market in recent years
- The portfolio manager for the new ETFs told Insider, "90% of it is a product that performs well and 10% of it is shaming."
Two new exchange-traded funds are aiming to mimic the portfolios of members of Congress — on both sides of the aisle.
On Tuesday, investment firm Subversive Capital Advisor and the data hub Unusual Whales launched two ETFs: the Unusual Whales Subversive Democratic ETF and Unusual Whales Subversive Republican ETF.
The former trades under the ticker NANC, a nod to Rep. Nancy Pelosi, while the latter's ticker is KRUZ, presumably a reference to Sen. Ted Cruz. The ETFs investments are based on the disclosed activity of any serving lawmakers, as well as their families.
The ETFs, which both come with a 0.75% management fee, are based on the premise that lawmakers benefit from insider knowledge provided by their positions, allowing them to achieve higher-than-average returns on their trades.
"Congress has outperformed the market and 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 ETFs' portfolio manager, Christian Cooper, said in a statement.
Despite a historically poor stock market, both parties ended 2022 in the green, according to an Unusual Whales report. Two House members — Reps. Pat Fallon and Debbie Wasserman Schultz — had even achieved returns of over 50%.
—unusual_whales (@unusual_whales) February 7, 2023
Pelosi has gained a particular following among some traders, who follow the investments of her venture capitalist husband Paul Pelosi. Although her portfolio declined by nearly 20% last year, the couple's positions have helped the former House Speaker earn the nickname "Queen of Stonks."
Meanwhile, Cruz has blasted the Pelosi stock trades and previously vowed to back legislation that would ban members of Congress from trading stocks.
While the STOCK Act of 2012 bans insider trading and conflicts of interest in Congress and forces lawmakers to be more transparent about their personal financial dealings, an outright ban on them trading stocks has failed to gain enough support on Capitol Hill.
Meanwhile, an Insider investigation in 2021 found that lawmakers have violated the STOCK Act.
The launch of the ETFs coincides with recent calls for a new bill to ban lawmakers from stock trades. Cooper told Insider, "90% of it is a product that performs well and 10% of it is shaming."