Two exchange-traded funds now allow retail investors to mirror the stock trades of Democratic and Republican members of Congress, creating an unprecedented opportunity to piggyback on the investment decisions of some of America’s most well-informed political insiders.
The results so far reveal a striking performance gap that may surprise investors.
Following the Money Trail
The Unusual Whales Subversive Democratic ETF (NANC) and Republican ETF (GOP) launched in February 2023, giving investors direct exposure to congressional trading patterns for the first time. Both funds track publicly disclosed stock transactions by members of Congress, automatically buying and selling based on official filings.
The concept addresses a controversial reality: members of Congress often possess information that retail investors simply cannot access. Through committee hearings, lobbying meetings, and advance knowledge of pending legislation, elected officials frequently trade with insights that would be considered insider information in any other context.
The Performance Numbers Tell a Story
Since inception, the Democratic-focused ETF has delivered significantly stronger returns across multiple time periods:
Year-to-date performance: Democratic ETF +16.02% vs Republican ETF +15.40% Past 12 months: Democratic ETF +16.32% vs Republican ETF +12.14%
2024 calendar year: Democratic ETF +26.83% vs Republican ETF +14.45%
For comparison, the Vanguard S&P 500 ETF returned 13.26% year-to-date and 13.35% over the past 12 months. The Democratic ETF has outperformed the broader market in every measured period, while the Republican ETF has shown more mixed results.
Portfolio Composition Reveals Different Investment Philosophies
The performance divergence becomes clearer when examining each fund’s holdings. The Democratic ETF shows heavy concentration in technology growth stocks that have dominated recent market gains:
Top holdings include: Nvidia (10.45%), Microsoft (7.93%), Amazon (5.20%), Alphabet (4.29%), and Apple (3.71%). The fund’s top 10 positions represent nearly half its total value, with significant exposure to the “Magnificent Seven” technology stocks that have driven much of the market’s recent performance.
The Republican ETF takes a more diversified approach across sectors: Comfort Systems USA (5.02%), JPMorgan Chase (4.78%), Nvidia (3.49%), AT&T (2.74%), and energy companies like Chevron. This broader sector allocation has provided less explosive upside but potentially more stability during market volatility.
The Information Advantage Question
The fundamental appeal of these ETFs rests on a simple premise: congressional members often know about regulatory changes, government contracts, and policy shifts before they become public. This information advantage has historically created opportunities for well-timed trades that retail investors couldn’t replicate.
Consider the sectors where congressional insight might prove most valuable: healthcare policy changes, defense spending allocations, infrastructure investments, and technology regulation. Members of relevant committees frequently trade in companies directly affected by their legislative work.
Investment Considerations and Risks
While the concept is intriguing, several factors warrant careful consideration. Both ETFs carry 0.74% expense ratios, meaning investors pay $7.40 annually per $1,000 invested. This fee structure is significantly higher than broad market index funds.
The Democratic ETF’s high portfolio turnover rate of 62% reflects the dynamic nature of congressional trading patterns. This active management approach can generate higher transaction costs and potentially less tax efficiency compared to passive index investing.
Portfolio concentration presents another risk factor. The Democratic ETF’s heavy weighting in technology stocks amplified gains during the recent tech rally but could magnify losses if these sectors face headwinds.
Beyond the Performance Numbers
The success of these ETFs raises broader questions about market fairness and information access. While congressional trading remains legal with proper disclosure, the performance differential between political parties suggests that some legislators may be more effective at translating their information advantages into investment returns.
The Democratic ETF’s stronger performance coincides with significant technology sector gains, raising questions about whether superior stock selection or favorable market conditions drove the outperformance.
Should Investors Follow Congress?
These ETFs represent a unique experiment in transparency and market access. For the first time, retail investors can directly mirror the investment decisions of political insiders with potential information advantages.
However, successful investing typically requires more than just copying other investors’ trades. Congressional members aren’t necessarily skilled portfolio managers, and their trading decisions may reflect personal financial needs rather than optimal investment strategy.
The limited track record also makes it difficult to assess whether the performance patterns will persist. Two years of data provide insufficient evidence to determine whether congressional trading strategies offer sustainable alpha generation.
For investors seeking market exposure, traditional index funds continue to offer lower costs, broader diversification, and longer performance histories. These congressional ETFs might serve better as small tactical allocations for investors curious about political trading patterns rather than core portfolio holdings.
The real value may lie not in the returns themselves, but in the transparency these funds provide into how America’s elected officials invest their personal wealth.
