You might be forgiven for thinking that this article is about politics. It’s not. It’s about investing. And it’s generally not a good idea to mix the two.
Late last year Point Bridge Capital LLC in Fort Worth, Texas, filed for the creation of a new exchange-traded fund (ETF) focused on those companies whose employees have contributed the most to Republican candidates or to political action committees. They plan to use the ticker symbol MAGA, which stands for “Make America Great Again.”
The 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 those that meet certain religious standards. But is this really the best 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 an effort to fund all of your future goals?
If you answered No. 1 or No. 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 so without linking your financial success to some dubious investment scheme designed to appeal more to your emotions than to your intellect.
As it turns out, MAGA is not alone among proposed politically oriented investments. According to Reuters, Active Weighting Advisors LLC in Cape Girardeau, Mo., 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 respective parties’ policies. How that is even possible is totally beyond me. But we can at least give them credit for being politically evenhanded.
Incidentally, in a later filing, Point Bridge stated that MAGA’s annual expense ratio would be 0.72 percent. That’s at least four times more expensive than the average large-cap U.S. stock index fund. Makes you wonder who they’re really trying to benefit: the Republican Party or themselves?