New GOP Ticker Spotlights Politically Themed ETFs

The GOP has its own ticker again.

An exchange-traded fund that curates its investments according to holdings reported by Republican members of Congress announced Wednesday that it is changing its ticker from KRUZ, presumably a nod to Sen. Ted Cruz, to simply GOP. The GOP ticker had been used by the Republican Policies Fund, an ETF that is no longer active. The confirmed ticker change presents an opportunity to compare how politically driven investments have done so far this year.

“These ETFs aren’t a tool to express a political view,” said Cinthia Murphy, investment strategist at VettaFi. “What’s interesting about the value proposition of these funds is the idea that Congress members are investing in stocks they themselves are regulating. This should offer a level of insight into the opportunity set that most of us lack.”

Whale You Were Sleeping

The GOP ticker belongs to the Unusual Whales Subversive Republican Trading ETF. That is not to be confused with the other Unusual Whales fund, the Subversive Democratic Trading ETF with the tickerNANC, almost certainly named after former Speaker of the House Nancy Pelosi. It’s unclear whether the ETF’s advisor, Tidal Financial, will seek a similar makeover for the Democratic fund’s ticker. The company said it currently does not have access to one. 

The ETFs base their holdings on publicly reported data from members of Congress, seeking to replicate them. According to Morningstar, the performance shows:

• KRUZ (soon to be GOP), which represents $54 million in assets, returned -1.6% year to date through March 18. It returned 5.6% over a year.
• NANC, at $214 million, returned -5.8% year to date and 8.2% over a year.

A Political or Apolitical? The two ETFs have significant sector tilts, with NANC having about half its allocations to tech and communications, and GOP having only half that much, but higher exposure to financials, industrials, and energy, said Murphy, who previously was head of research and content at Tidal Financial Group. In other words, GOP has a higher tilt to sectors poised to benefit from deregulation.

Another difference is crypto exposure. “It is clear that the GOP is getting on the crypto bandwagon and these decisions arguably reflect a more constructive view around the asset class,” Tidal senior portfolio manager Dan Weiskopf said in an email.

The allocation differences explain the variance in performance between the two ETFs this year, said Aniket Ullal, head of ETF research and analytics at CFRA Research. A challenge that both of the ETFs have is differentiating themselves from broad market index funds, as many of their holdings overlap, he said. For example, about 85% of the stocks in NANC are in the S&P 500, he said. 

“In theory, members of Congress have access to information earlier than members of the public,” which should guide their investing habits, he said. “Looking at the holdings, it doesn’t look like that’s actually happening.”