Today Point Bridge Capital is rolling out its first ETF, which seeks to invest in companies supportive of the Republican Party. The Point Bridge GOP Stock Tracker ETF (MAGA) is tied to an index derived from the S&P 500 that implements an equal-weighting approach.
MAGA comes with an expense ratio of 0.72% and lists on the Bats exchange, which is owned by ETF.com’s parent company, CBOE.
“Investors did not have a way to invest in companies that were supporting the types of candidates that they wanted to elect,” said Point Bridge Capital CEO Hal Lambert of his reasons for launching the fund.
“Everything has become much more politicized: The CEOS of the companies have become very political, very activist, and the money that’s being given to the campaigns has become larger and larger. They are affecting the outcomes of elections, and I think that investors should have the opportunity to invest accordingly,” he added. “I’m calling it ‘political beta,’ and I’m also looking at this as being ‘politically responsible investing.’”
According to the fund’s prospectus, the methodology is designed to target the companies whose employees and political action committees have donated the most to Republican candidates for national office and to groups and federal committees associated with the Republican Party that are also subject to federal campaign contribution limits. The selection process relies on electoral campaign contribution data from the Federal Election Commission, and considers data across two-year election cycles.
Companies that have reported total political contributions during the last two election cycles of less than $25,000 are removed from consideration. The ones that remain are ranked using a proprietary screening process that looks at the net amounts donated in terms of the total dollars donated and the percentage of dollars given to Republican causes versus Democratic causes. From there, the top 150 companies by rank are selected for the index at each reconstitution and are equally weighted, the prospectus said.
According to Lambert, the companies in the index are high-quality stocks. “If you look at the contributions, they’re typically doing pretty well,” he said.
The fund is also fairly diversified, but it deviates from the sector allocation of the S&P 500. There are “very little to zero” technology stocks, Lambert notes, and it also has stronger tilts toward industrials and financials.
He makes the point that people will often boycott companies that do things they disagree with, refusing to buy their products, but those same people—as investors—may not know they own the same company as a stock in one of their funds. MAGA allows those investors to “invest in a way that aligns with their political beliefs.”
“I think people will be surprised at some of the companies that are in it—I think that will create a lot of discussion,” Lambert added.
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