How Democratic, Republican politician stock portfolios differ philosophically

Subversive Capital Portfolio Manager Christian Cooper joins Yahoo Finance Live to discuss the launch of Democratic and Republican ETFs, politicians beating the stock market in 2022, and other subversive ETFs.

Video transcript

RACHELLE AKUFFO: Over the years, lawmakers across the political spectrum have dipped their hands in the stock market cookie jar. Just last year, congressional holdings beat the S&P 500 index fund SPY by nearly 18%, despite it being the worst market since 2008. Now for anyone looking to get in on the action, two new exchange traded funds just launched that track the trading of US congressional members and their families.

The Democrat tracking ticker will be under the ticker symbol NANC, and the Republican version will be under KRUZ. Both ETFs launched by Subversive Capital in partnership with Unusual Whales. Joining us now to discuss is Christian Cooper, Subversive ETFs portfolio manager. Good to have you, Christian. This is a fascinating concept. Of course. I'm sure it's not lost on people NANC being Nancy Pelosi, KRUZ for Ted Cruz here. Talk about the decision to launch these ETFs.

CHRISTIAN COOPER: It was really the genius of Unusual Whales to begin documenting and categorizing members of Congress, how they trade, and the real absurdity behind the idea that any-- that they can do a lot of what we can't, right? And so if I were to trade ahead of the fund or if you were to trade ahead of some of the names you cover, I'm sure there would be severe consequences. So part of that was transparency around what members of Congress are doing and how we can get a vehicle to the public to both be transparent, number one, and hopefully achieve some of those outside returns.

RACHELLE AKUFFO: Now, obviously, it is tough because then we'll sort of be playing catch-up as Congress men and women continue to do this. But talk about, first of all, the Nancy portfolio. What exactly is made up? What are the holdings there?

CHRISTIAN COOPER: Well, it's really fascinating. As I began to look at the portfolio construction, I keep thinking that there is a PhD thesis in there somewhere because I think of the Democrat Nancy side as holding ideas and the Republicans holding themes.

And what I mean by that is you would-- the holdings among Nancy are the Apple, the Google, the Microsoft, the NVIDIA, the things that you might expect from a-- let's call it a tech-heavy worldview, and which contrasts quite dramatically from the Republican side or the Cruz ticker, which are the themes, which are-- it is gambling. It is the oil. It is the United steel. It's Dow Chemical.

So it's just a really interesting split between the two sides that it's really hard to ignore the philosophical differences there on both sides of the aisle. So it's just-- it's a truly fascinating study in what each of-- what each sides holds.

RACHELLE AKUFFO: And what sort of inflows are you seeing into these funds at the moment?

CHRISTIAN COOPER: Well, I mean, it was a monster launch. There's no other way to put it. We-- it exceeded all expectations in terms of our volume. I'm really excited to see the retail participation. And as I'm checking volume right now, it looks like we may even beat yesterday's volume. So that's kind of what we want. We want a vehicle for transparency. We want someone to be able to own their values and sleep at night, basically, and with the knowledge that they own either whichever side of the aisle that they're on, or they choose to own both and track Congress as a whole.

RACHELLE AKUFFO: And I mean, you're very creative and mission driven, as I'm looking at some of the other things you cover. That includes things like mental health, also some climate in there as well. How do you see the role of Subversive ETFs growing?

CHRISTIAN COOPER: Well, we kind of think about it as putting your money on a mission. And that has a very ESG tone to it, but we are a little bit-- we don't really wear that moniker well. We think that there is a particular worldview that is evolving. And whether that is capturing the elements of food security, like we have in KCAL, or the decarbonization efforts that are under the way-- underway that are probably going to be nuclear focused in the future, then we want to own those verticals. And we are building portfolios built on a changing worldview and doing it also while focusing on valuation.

So that's really part of the decision-making process. It really is, what is going to be the state of the world five years from now? What do we want to own right now to build that long-term capital? Given the strength of the dollar, a lot of these holdings are international. So we can-- within KCAL, I joke that we're using rich dollars to buy cheap fertilizer and our food security ETF. I mean, that truly is the case, but it really is worldview driven and valuation driven second after that.

RACHELLE AKUFFO: So what about for independent candidates who might be feeling a bit left out when they see these ETFs? Is there room for them? Are their plans to expand this political portfolio?

CHRISTIAN COOPER: No, I think the only-- unless Manchin leaves the party, I think that maybe Bernie may be the only one left. But it would be a very small, small portfolio. It is-- part of the-- we did make the conscious decision to split up the funds. There was the opportunity to have a single vehicle that tracked Congress as a whole. But I think the idea of giving someone the capacity to own their values that align with them and knowing that they can invest alongside their political views is really important without worrying about the ESG implications or ESG constraints of that. So, no, no middle of the road for us. It's very partisan, just like America.

RACHELLE AKUFFO: Well, there you go. A big thank you there to Subversive ETFs portfolio manager, Christian Cooper. Fascinating stuff.