Democratic ETF outpaces Republican peer on Big Tech bets

By Thomson Reuters Mar 14, 2024 | 7:38 AM

By Bansari Mayur Kamdar

(Reuters) – An exchange-traded fund that follows the stock trades of Democratic lawmakers has seen sharp gains since its launch last year, outperforming a Republican-oriented fund, on the back of big bets on megacap technology companies.

The $49 million Subversive Unusual Whales Democratic ETF, the ticker of which is a play on the name of former Democratic Speaker Nancy Pelosi, has surged nearly 35% since its launch on Feb. 7 last year.

That compares with a 25.8% gain for the benchmark S&P 500 index during the same period and an 18.1% advance in the $12.5 million Subversive Unusual Whales Republican ETF, whose ticker is a nod to Republican senator Ted Cruz.

“NANC has outperformed KRUZ because it tilts toward growth stocks and underweights energy,” said Bryan Armour, an analyst at Morningstar, adding that the Republican ETF also favored more value stocks.

AI darling Nvidia makes up near 10% of the Democratic fund, followed by Microsoft Corp, Alphabet Amazon.com, Salesforce and Apple, which constitute about 27.3% of its assets, according to the fund’s website.

Meanwhile, energy stocks such as Shell, NGL Energy Partners, ConocoPhillips and Chevron, that are among the top 10 holdings of the Republic ETF have broadly underperformed the market with some falling year-to-date.

The Democratic fund has seen net inflows of $32.8 million year-to-date, according to LSEG Lipper data, while the Republican fund has garnered just $5.8 million.

“We are getting large allocations solely based on performance and the story of what these funds represent: the best information from the best-informed crowd,” said Christian H. Cooper, portfolio manager at Subversive Capital, which launched both the funds with financial data firm Unusual Whales.

Congressional trading has been under growing scrutiny and attracted calls to ban lawmakers from trading.

A 2012 law requires lawmakers to disclose their stock transactions as well as that of family members within 45 days.

Pelosi’s portfolio that includes Nvidia and Apple, is up 84.3% year-to-date, according to Unusual Whales.

Republican congressman Mark Green’s portfolio is up 126% so far this year, after bumper gains last year, while senator Rand Paul’s portfolio fell 6.9%.

Total assets of the Democratic fund have grown to $49 million from $6.7 million in one year, while the Republican fund has climbed to $12.5 million from $4.3 million, according to LSEG Lipper data.

Another battle brews as Democrats prepare to face the Republicans in the U.S. presidential elections and primaries this year, with the former wresting for control of the House of Representatives and trying to hold on to their majority of the Senate.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Shinjini Ganguli)