New politically-themed investment funds that mimic lawmakers' money moves aim to shame Congress into banning individual stock trades
- New exchange-traded funds based on congressional stock holdings are launching Tuesday.
- While the investments are supposed to make money, they're also throwing shade at lawmakers.
The portfolio manager of two niche exchange-traded funds that will invest in the same individual stocks congressional leaders from both parties pour their money into told Insider that needling lawmakers is definitely part of the design.
"90% of it is a product that performs well and 10% of it is shaming," said Christian Cooper, who has been tasked with running the Democratic-themed fund ($NANC) and Republican-themed fund ($KRUZ) co-created by investment firm Subversive Capital and online trading hub Unusual Whales.
The twin offerings, which were originally floated last fall as House Democratic leaders dragged out the legislative process, are scheduled to begin trading on Tuesday.
A press release about the new funds says that in 2022, congressional holdings beat the SPY index fund by nearly 18%. The timing and frequency of investments by elected officials, their spouses, their dependent children, and even senior Capitol Hill staffers have raised alarm in recent years as Congress wrestles with sagging approval ratings and mounting ethics inquiries.
Insider's "Conflicted Congress" project has identified dozens of members of Congress who have violated the Stop Trading on Congressional Knowledge (STOCK) Act — whose enforcement is woefully lacking — by failing to disclose their stock trades on time.
Last week, Democratic lawmakers including outspoken trading ban advocate Rep. Abigail Spanberger of Virginia sent Speaker Kevin McCarthy a letter urging him to follow through on his plan to "change the current behavior."
"We are trying to affect a change in the outcome," Cooper, who is in favor of a congressional stock trading ban, said of the advocacy element involved in unveiling the new funds — though he seriously doubts anything will come of it.
"I think the likelihood of a ban on congressional trading is near zero percent," Cooper said, adding that "a Congress that is this divided is not going to act in the best interest of American citizens.
Cooper said that two funds, whose respective ticker symbols are intentional winks at Democratic Rep. Nancy Pelosi of California and Republican Sen. Ted Cruz of Texas but which track trades made by every sitting lawmaker, provide a window into what the parties value most.
"You can see the political differences in the things that they hold," he said, adding that the economic snapshots "reflect vastly different worldviews" and "vastly different hope for the future."
While he said he was not at liberty to discuss particular holdings ahead of the launch, Cooper said Democrats tend to be more "tech heavy" while Republicans seem most interested in profiting off vice.
"It's high-interest loans. It's a vascular disease. It's gambling. It's cigarettes," he said of the GOP's investment priorities.
Cooper said he did find one eyebrow-raising nexus: tobacco giant Philip Morris.
"The only common holding among the top 10 in both funds is Philip Morris," he said. "And we think it is unusual that the company that is among the top lobbyists in the country is also among the top holdings."
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