These ETF funds let people trade stocks like members of Congress

It’s fairly well known that politicians regularly beat the market, making lucrative and sometimes strangely-timed stock trades that put a lot more in their pockets than their sub-$200,000 salaries. Now, anyone can trade like a member of Congress.

Enter NANC and KRUZ, the tickers behind two exchange-traded funds that mimic moves made by Democrats and Republicans, respectively. Just take a guess at which elected representatives they are named after.

The new funds launched Tuesday and are powered by Subversive Capital Advisor and Unusual Whales, an option flow platform that tracks congressional trades. Members of Congress are required to report trades in a timely manner under the 2012 Stop Trading On Congressional Knowledge (STOCK) Act passed under then-President Barack Obama.

While 2022 was the worst year for the stock market since 2008, Congress remained relatively unscathed. The S&P 500 lost 19.4% while Republicans on average gained 0.4% on the year and Democrats lost a mere 1.8%, according to Unusual Whales data.

It’s the second year in a row the platform has highlighted the phenomenon. Unusual Whales has a clear, stated agenda: To ban politicians and their spouses from trading individual stocks. It’s an issue that has gotten mixed reviews from those who benefit most.

“We are a free market economy, they should be able to participate in that,” Former House Speaker Nancy Pelosi said in December 2021, defending her husband Paul’s ability to trade. She later changed her tune and coalesced with fellow members of her party in 2022 to not actively work against legislation that would ban trading among members and spouses, but legislation has not significantly progressed, despite bipartisan support for it.

Nancy and Paul Pelosi have made a great deal of money on well-timed trades, fueling accusations that members of Congress have insider knowledge that benefits them on Wall Street. Along with the Democratic ETF playing off her name, Republican Sen. Josh Hawley also used her namesake for a bill that would ban stock trading by members of Congress and their spouses. It’s called the PELOSI Act, or Preventing Elected Leaders from Owning Securities and Investments. Hawley reintroduced the bill in January.

Despite the widespread attention paid to Pelosi’s success in the stock market, in 2021, five Republicans out-traded Pelosi in a who’s who of politicians to beat the stock market, according to Unusual Whales’ tracker. And in 2022, she didn’t even make the list, losing more than the market. For both years, Republicans topped it. In 2021, Rep. Austin Scott, R-Ga., ran away with the crown, and in 2022 Rep. Pat Fallon. R-Texas, gained nearly 52% to take the lead.

Overall, Unusual Whales determined Republicans did slightly better than Democrats in 2022 because of more exposure to the energy sector, while Democrats remained tech heavy.

“We believe members of Congress have more information than the rest of us, and if they can trade on that information, we should be able to do the same,” said Christian Cooper, the portfolio manager for both NANC and KRUZ.

While both parties benefit from great returns on the stock market, it’s not something that gets equal coverage by partisan media. This story on a Paul Pelosi trade was a Media Miss by the left. Not only does Straight Arrow News bring readers the news down the middle, we also point out when one side misses a story altogether. Check out our Media Miss feature here.