Trump isn’t involved in the fund. Despite the cutesy ticker symbol, it isn’t designed to track Trump-friendly stocks or industries like oil giants, big banks and defense contractors.
Rather, Point Bridge — the investment firm that manages an index which the fund is based on — says it invests in 150 S&P 500 companies that have the highest number of workers and political action committees (PACs) that have donated to Republicans in the past two election cycles.
No FAANG exposure hurts MAGA
So why is the MAGA fund doing so poorly?
Hal Lambert, founder of Point Bridge Capital, noted to CNN Business in an interview that there aren’t many tech stocks in the MAGA ETF, as Silicon Valley firms tend to support more liberal/progressive/Democratic causes and candidates.
The fact that the fund equally weights its stocks, as opposed to market cap weighting, only adds to the disparity.
“Tech has driven the market,” Lambert said.
Asked what will happen to the MAGA ETF if Trump loses, Lambert — who said he’s voting for Trump — did not rule out the possibility of launching a so-called Blue Wave ETF that focuses on companies donating to Democrats.
But he argues that a Biden victory could actually be a good thing for the MAGA ETF because disgruntled Republicans might invest more in it. And Lambert said the fund will keep the MAGA ticker even if Trump loses.
“The goal for this ETF was to have something for conservatives to invest in that hasn’t been out there,” Lambert said.
Still, the poor performance of the MAGA ETF might be a sign that politics and investing don’t mix well.
For example, fund company EventShares shut down its Republican Polices and Democratic Policies funds in 2018, opting to combined them with a tax reform ETF to create a new fund called the U.S. Policy Alpha ETF.
That fund closed shop in August.