Proposed ETFs Aim to Mimic Congress’ Stock Picks

Congressional-tracking exchange-traded funds NANC and KRUZ aim to profit from lawmakers’ stock choices, but they may face a slew of headwinds. 

In a recent filing, Subversive Capital Advisors disclosed it’s pursuing the launch of two new ETFs, the Unusual Whales Subversive Democratic Trading ETF (NANC) and the Unusual Whales Subversive Republican Trading ETF (KRUZ), apparently taking their names from House Majority Leader Nancy Pelosi (D-CA) and Sen. Ted Cruz (R-TX).  

If the proposed funds are approved by the Securities and Exchange Commission, they will comb through financial disclosures of Democratic and Republican lawmakers, their spouses and dependent children to construct portfolios.  

Creation of the funds comes on the heels of a flurry of proposals to ban stock trading by members of Congress. A recent New York Times report found that at least 97 current members of Congress or their families engaged in trading that overlapped with the lawmakers’ work.  

Later, Insider reporting showed that 72 members have neglected to report trades as required by the 2012 Stock Act, which requires members of Congress to disclose any securities transactions of more than $1,000 within 45 days.  

Just last week, Pelosi said that the House of Representatives would consider legislation that would place restrictions on members of Congress regarding buying and selling securities later this month.  

“What we want to make sure is that back in January 2020, when we were having classified briefings about a potential pandemic, that no one is able to leave, call their stock broker, and say ‘I want you to put money in on Pfizer and Clorox and dump these other stocks,’” said Rep. Abigail Spanberger (D-VA), said in an appearance on Yahoo Finance Live yesterday. She is a co-author of proposed legislation to reconfigure trading rules for lawmakers.  

But following prominent figures’ portfolio choices isn’t a novel idea. In 2012, the the Global X Guru Index ETF (GURU) launched, tracking and constructing portfolios from published holdings of large hedge funds.  

The fund is down 27.3% year to date, dramatically underperforming the S&P 500, which slipped 19.8% during the same period. In 10 years, the fund has managed to scrape together just $49.1 million in assets, and sees around $55,300 in average daily volume, ETF.com data shows.  

Contact Shubham Saharan at [email protected]