President Donald Trump’s Truth Social Launches 5 America-First ETFs
Whether his political appeal translates into assets remains to be seen.
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Donald Trump’s brand is one of the most recognizable on the planet, but can it help the two-time president break into a competitive ETF marketplace?
Trump Media & Technology Group and asset manager Yorkville America Equities launched five America First-themed ETFs last month. The passive, thematic funds hold companies that “really stand for America and attempt to avoid themselves of biases,” Steve Neamtz, Yorkville America president, told Advisor Upside at an opening bell event at the New York Stock Exchange on Thursday. While Trump’s rhetoric has helped him sell everything from golden sneakers to autographed guitars and crypto, whether that appeal translates to clients and traditional investors remains uncertain. However, advisors generally caution against letting politics drive investment strategies.
“Political ETFs have run the gamut of performance, but generally, they underperform the market due to a lack of diversification and higher costs,” said Bryan Armour, director of ETF and passive strategies research at Morningstar.
Truthiness
Though still early, the funds appear to be more than just the Trump name. “From a purely investment perspective, the Truth Social ETFs are fairly differentiated, since they tend to hold stocks across multiple sectors,” said Aniket Ullal, head of ETF research and analytics at CFRA. As of Monday, the new ETFs had amassed roughly $46 million in net assets combined. The five funds include:
- Truth Social American Security & Defense ETF (TSSD).
- Truth Social American Next Frontiers ETF (TSFN).
- Truth Social American Icons ETF (TSIC).
- Truth Social American Energy Security ETF (TSES).
- Truth Social American Red State REITs ETF (TSRS).
Ullal highlighted TSSD, which allocates 45% of its portfolio to the IT sector, far more than comparable defense funds. TSES, meanwhile, spans both energy and utilities, unlike the widely popular Energy Select Sector SPDR ETF (XLE), which concentrates on a single sector. All five funds carry expense ratios of 0.65%, above the 0.48% average for US equity factor and thematic ETFs, though not unusually so, Ullal added.
On a long-term basis, thematic ETFs struggle to deliver better returns than the market, Armour said. Outside of TSRS — which targets real estate companies earning most of their revenues in states that voted for a Republican presidential candidate in two of the past three elections — thematic exposures should influence performance more than politics, he added.
Anti-Woke? The funds might bar companies from their underlying indexes if any five of six listed conditions are met. Those criteria include having DEI hiring quotas, which are arguably distinct from broader diversity goals. Another is whether firms sever relationships over political or religious beliefs or participate in boycotts, divestments or sanctions. However, the vast majority of stocks should still fit within the rules of the funds’ underlying index, making it, dare we say, inclusive.
