If you're like most Americans, you know who you're voting for. But positioning your portfolio for the 2024 presidential election — and the reaction of the S&P 500 — isn't so simple.
The stakes of this contentious elections loom large. Everything from taxes to tariffs and government spending are up in the air. Nearly half of Americans think their financial life will be altered by the outcome of the upcoming election, says a poll by the National Endowment for Financial Education.
A number of ETFs let investors try to make money from the election's outcome — but it's harder than it looks.
"Mixing politics and investing is complicated," said Todd Rosenbluth, head of research at TMX VettaFi.
ETFs For 2024 Presidential Election
When it comes to politics, it's often easy to follow the money. And that's the idea behind two of the more interesting politically focused ETFs.
Unusual Whales Subversive Democratic ETF holds stock in companies owned by Democratic members of Congress and their spouses. Similarly, Unusual Whales Subversive Republican ETF owns positions in stocks held by Republican members of Congress and their spouses.
Subversive Democratic has a decidedly stronger tilt toward technology stocks. The top holding at 13% of the portfolio is Nvidia followed by Microsoft at 8.2% and Amazon.com at 4.6%.
Meanwhile, Subversive Republican leans toward financial and energy stocks. Its top holdings are JPMorgan Chase at 4% of the portfolio and then Nvidia at 3.6%. Chevron accounts for 2.2% of the portfolio.
But neither of these ETFs has gained much traction. They're not cheap, either. Subversive Democratic holds assets of just $182 million and charges 0.76% annually. Subversive Republican is even smaller, with assets of just $35.6 million. And more expensive, charging 0.83% annually.
And their performance isn't great, either. Subversive Democratic is up 25.9% this year, marginally beating the S&P 500's 22.2% gain. But Subversive Republican is lagging the S&P 500 with a 14.9% rise.
Another Set Of Election Plays
But there are competing ways to play this contentious election with ETFs. But they haven't performed any better so far this year.
The $109.3 million-in-assets American Conservative Values ETF owns the S&P 500, excluding companies it says violate conservative thinking. Some of the roughly 40 excluded stocks are Walt Disney, BlackRock, Alphabet, Amazon, Warner Bros. Discovery and Paramount Global. The excluded stocks account for nearly 30% of the S&P 500.
And then there's the Democratic Large Cap Core ETF. The tiny $39 million-in-assets ETF invests in companies that tend to donate to Democratic causes. A company is eligible if its "own contributions and those of its senior executives comprise an average of 75% or more of their total documented contributions to Democratic candidates and political action committees," the fund's site says. Roughly 200 S&P 500 companies make the cut, including Nvidia at 5.5% of the portfolio and Apple at 5.1%.
But these investments haven't paid off, either. Shares of American Conservative Values are up just 20.7% this year, lagging the S&P 500. And Democratic Large Cap Core is also lagging the S&P 500 with a 21.9% gain.
Complexities Of Politics
Making money on politics, simply stated, isn't as easy as it sounds.
Some investors thought Invesco Solar ETF was a natural winner with a Democratic administration that's supported clean energy. And yet, the ETF is down 27% this year.
"ETF performance is not necessarily correlated with government policies. The Invesco Solar ETF is up 36% in the last five years but all of the gains occurred while Donald Trump was in office and not Joe Biden who passed clean energy bills," Rosenbluth says.
Political ETF Plays
| ETF | Symbol | YTD % ch. | Assets ($ millions) | Fee |
|---|---|---|---|---|
| Unusual Whales Subversive Democratic Trading | NANC | 25.5% | $182 | 0.76% |
| Democratic Large Cap Core | DEMZ | 21.7% | 38.6 | 0.74% |
| American Conservative Values | ACVF | 20.6% | 109.3 | 0.75% |
| Unusual Whales Subversive Republican Trading | KRUZ | 14.6% | 35.6 | 0.83% |
| Invesco Solar | TAN | -27.1% | 1,000 | 0.67% |
| SPDR S&P 500 ETF Trust* | SPY | 22.0% |
