Want to beat the market like a member of Congress? Now you can
US politicians have long come under fire for their stock trading activity.
Politicians’ trades have been shown to perform twice as well as the market average. In some high-profile cases, members of Congress have bought into companies just days before their share prices skyrocketed after positive developments.
Now, Etoro has launched three new portfolios to try to help the British public take advantage of the moves.
Their first new option, the Congress-Buys portfolio, will include the top 10 stocks recently bought by members of Congress over the last 100 days based on the size of the purchase.
Initial allocation includes stocks such as Nvidia and Simon Property Group.
Meanwhile, Etoro’s Lobby-Spending portfolio will include the 10 companies with the most quarter-on-quarter growth in US federal lobbying expenditures, like Ebay and Roblox.
Finally, the DC-Insider portfolio will consist of firms that are frequently traded by Congress members, spend a large amount on lobbying and hold a significant number of government contracts, such as AT&T and Ford. All three of these portfolios will be rebalanced monthly.
Ironically, these portfolios aren’t available to US investors.
But that doesn’t mean US investors will miss out.
There are already several ETFs that track the trades of Democrats and Republicans in Congress and their spouses.
The Unusual Whales Democratic ETF, which trades under the symbol “NANC” in a nod to former House Speaker Nancy Pelosi, has outperformed the S&P 500 by a wide margin since launch in 2023.
Meanwhile, the Subversive Unusual Whales Republican ETF (KRUZ) invests in equity securities purchased or sold by Republican members of Congress and their spouses.
Commenting on the Etoro launch, CIO Gil Shapira said: “Federal law requires Congress members’ stock trades, companies’ lobbying expenditures and government contracts to be disclosed, but it can be difficult for retail investors to scrape and analyse this information in a simple way to support their investment decisions.”
The STOCK (Stock Trading on Congressional Knowledge) Act 2012 requires US politicians to publicly file and disclose any financial transaction, including stock trades, within 45 days of its occurrence.
Meanwhile, the Lobbying Disclosure Act 1995 requires lobbyists in the US to disclose information about their activities, such as their clients, which issues they are lobbying on, and how much they are being paid.
“One of our goals is to help retail investors better understand the relationships between Wall Street and Capitol Hill, and give them the tools to act off that information,” said James Kardatzke, CEO of Quiver Quantitative, which Etoro partnered with to make the portfolios.
“We are excited to bring some of our data and strategies to Etoro’s platform and hope it will be a valuable resource for their traders.”