Would You Invest In The Republican Party?
Let me say right from the outset that this post is not about politics. It’s about investing. And it’s generally not a good idea to mix the two.
You may have heard that earlier this year Point Bridge Capital LLC in Fort Worth, Texas filed for the creation of a new ETF focused on those companies whose employees have contributed the most to Republican candidates or political action committees. They plan to use the ticker symbol MAGA, which stands for “Make America Great Again.”
This fund (if it ever gets off the ground) will join a growing number of ETFs that cater to people expressing their social or political views through their investments. These funds focus on companies such as those with high gender diversity or on those that meet certain religious standards. But is this really the right way to invest?
Putting aside your political leanings for the moment, why are you investing in the first place? Is it (1) to make some kind of public statement? (2) To make you feel that you are helping your country in some way? (3) To grow your savings in a risk-managed way in order to fund all your future goals? If you answered #1 or #2, I contend that you would be putting your own future at greater risk by tying your investments to your politics. If you want to support your favorite political party, there are many ways to do it without linking your financial growth to some dubious investment scheme designed to appeal more to your emotion than to your intellect.
It turns out that MAGA is not alone among proposed politically-oriented investments. According to Reuters, Active Weighting Advisors LLC in Cape Girardeau, Missouri, is planning a Republican Policies Fund and a Democratic Policies Fund, appropriately listed under the tickers GOP and DEMS respectively. These funds are designed to perform better when the U.S. government is helped by each of the parties’ policies. How that is even possible is totally beyond me. But the fund company appears at least to be politically neutral.
Incidentally, in a later filing Point Bridge stated that MAGA’s annual expense ratio would be 0.72%. That’s at least five times more expensive than the average large cap U.S. stock index fund. Makes you wonder who they’re really trying to support, the Republican Party or themselves.