GOP, Democrats, set to work together
NEW YORK • An ETF startup is trying to do what Congress can’t: get Democrats and Republicans to work well together.
Active Weighting Advisors is shutting down two EventShares-branded exchangetraded funds that focus on Republican and Democratic policies, it said in a press statement. Meanwhile, the firm, which was founded by a Goldman Sachs alum, is broadening the strategy of a third product to invest in companies affected by a range of political themes, regardless of party affiliation. The ETFs all began trading six months ago.
As of Thursday, the company’s U.S. Tax Reform Fund, which had the ticker TAXR, became the U.S. Policy Alpha ETF, trading under the symbol PLCY. The EventShares Republican Polices Fund, GOP, and Democratic Policies Fund, DEMS, will liquidate on April 27, the firm said in a statement.
The funds that are being closed failed to gain traction with investors, gathering less than US$2 million in combined assets. TAXR, on the other hand, saw a small boost amid President Donald Trump’s overhaul of the U.S. tax regime. It managed about US$10 million, which will go to PLCY.
“You have the tickers GOP and DEMS, so people immediately look at those and say ‘I feel like I’m voting in my portfolio,”’ said Ben Phillips, EventShares chief investment officer. “They view these as partisan funds and no matter how much we try to say that they are policy driven from each party, the political taint is hard to shake.”
GOP has returned 12 per cent since it started and more than 4 per cent this year, beating the S&P 500 Index. The report card for DEMS is more ambiguous; it’s underperformed on a pure price basis — partly because of very limited trading — but its net asset value has gained more than the benchmark since inception.
PLCY was down 0.5 per cent to US$21.62 as of early Thursday in New York. The new fund combines themes from both political ETFs to invest in companies affected by policy on taxes, trade, defence, health care, education, border security and the environment, according to the release. It’s actively managed and can go long or short on stocks it picks.
“We will look for a very specific policy catalyst for every single stock held in the portfolio,” Phillips said. “It doesn’t matter where that policy is coming from. It usually takes some bipartisanship or just some effort from both sides to get most major legislation done.”