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The ‘MAGA’ ETF is trailing the marketplace for one main cause

The Point Bridge GOP Stock Tracker ETF (MAGA), which trades underneath the image MAGA, is down 8% this yr — in sharp distinction to the benchmark S&P 500, which is up 7%.

Trump is not concerned within the fund. Despite the cutesy ticker image, it is not designed to trace Trump-friendly shares or industries like oil giants, massive banks and protection contractors.

Rather, Point Bridge — the funding agency that manages an index which the fund is predicated on — says it invests in 150 S&P 500 firms which have the best variety of employees and political motion committees (PACs) which have donated to Republicans prior to now two election cycles.

The fund has underperformed towards the broader market since its September 2017 inception, up simply 6.7% in comparison with the S&P’s 41.5% pop.
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The MAGA ETF’s holdings are largely equally weighted, with no particular person inventory accounting for greater than 1% of its property. Among the highest 10 shares within the MAGA ETF are residence builder NVR (NVR), FedEx (FDX), Whirlpool (WHR) and General Electric (GE).
And there are additionally some shocking holdings within the fund, most notably Berkshire Hathaway (BRKB).
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CNN father or mother firm AT&T (T) can be within the fund.

No FAANG publicity hurts MAGA

So why is the MAGA fund doing so poorly?

Hal Lambert, founding father of Point Bridge Capital, famous to CNN Business in an interview that there aren’t many tech shares within the MAGA ETF, as Silicon Valley corporations are inclined to assist extra liberal/progressive/Democratic causes and candidates.

That means the fund has missed out on the Big Tech rally this yr, whereas the S&P 500’s efficiency has been juiced by sturdy good points in megatechs Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), Google proprietor Alphabet (GOOGL), Facebook (FB) and Netflix (NFLX). None of them are within the MAGA ETF.

The proven fact that the fund equally weights its shares, versus market cap weighting, solely provides to the disparity.

“Tech has driven the market,” Lambert stated.

Asked what’s going to occur to the MAGA ETF if Trump loses, Lambert — who stated he is voting for Trump — didn’t rule out the potential for launching a so-called Blue Wave ETF that focuses on firms donating to Democrats.

But he argues {that a} Biden victory might really be a very good factor for the MAGA ETF as a result of disgruntled Republicans would possibly make investments extra in it. And Lambert stated the fund will preserve the MAGA ticker even when Trump loses.

“The goal for this ETF was to have something for conservatives to invest in that hasn’t been out there,” Lambert stated.

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Still, the poor efficiency of the MAGA ETF is likely to be an indication that politics and investing do not combine properly.

While the rise of so-called ESG funds may very well be considered as a politically themed guess — since many Democrats assist environmental, social/racial and company governance points — the ESG motion is not particularly about political views per se.
And different ETFs that centered on politics in recent times have performed poorly as properly.

For instance, fund firm EventShares shut down its Republican Polices and Democratic Policies funds in 2018, opting to mixed them with a tax reform ETF to create a brand new fund known as the U.S. Policy Alpha ETF.

That fund closed store in August.

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