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Here's an ETF to "Make America Great Again"

Sanghamitra Saha
The Macerich Company (MAC) opens Scottsdale Fashion Square's refurbished luxury wing. The face-lift enables the mall to add an impressive tenant lineup to its roster.

Now investors probably do not have to work hard to replicate President Donald Trump and his Republican party’s agenda. This is because an ETF is planned to follow the Grand Old Party (GOP). The issuer of the fund chose Donald Trump’s slogan “Make America Great Again” to name the fund with the ticker code MAGA.  

Let’s delve a little deeper into the fund.

Inside MAGA

The Point Bridge GOP Stock Tracker ETF looks to track the performance of the Point Bridge GOP Stock Tracker Index. The index employs a rules-based methodology to track the performance of companies “whose employees and political action committees are highly supportive of Republican candidates for election to the United States Congress, the Vice Presidency, or the Presidency and related Republican Party committees, ”as per the filing.

Notably, the underlying index will be constructed on companies included on the S&P 500. The top 150 companies qualifying the fund’s investment objectives get a place on the index at the time of every reconstitution, as per the filing.

Annual expenses for the fund are $72 for every $10,000 under management and it is likely to be listed on CBOE Holdings Inc's Bats exchange, as per an article published on nytimes.

How Does it Fit in a Portfolio?

The broader markets welcomed the 45th U.S. Republican President with aplomb last year and remained steady despite political uncertainty. The ascent defied the previous trends as history shows that stocks do better under Democratic presidency.

Notably, the S&P 500 index has gained 6.7% annually during a Republican presidency versus 9.7% gains with a Democratic president since 1945, per S&P Global Market Intelligence (read: Prepare for a Trump Presidency With These Stocks & ETFs).

However, with Trump putting stress on boosting infrastructure, enacting tax cuts and bringing U.S. manufacturing jobs back to the country, this seems to be the right time to invest in America-oriented ETFs or specifically GOP or Trump-oriented ETFs. After all, Trump is the person who is asking to "buy American and hire American."

Competition

There is no direct competition to MAGA. However, the nytimes article went on to point out that Event Shares, another ETF issuer Active Weighting Advisors, also plans a Republican Policies Fund and a Democratic Policies Fund listed under tickers GOP and DEMS.

If we dig a little deeper, we would notice that MAGA may face competition from some specific corners of the ETF world. 

For example, since small caps generate most of their revenues from the domestic market, they are more closely tied to the domestic economy and increased hiring in the country.This will likely make small-cap ETFs like iShares Russell 2000 IWM winners (read: Why Small Cap ETFs are Betting Big on Trump?).

Also, with Trump expected to boost American manufacturing jobs and oppose outsourcing, First Trust RBA American Industrial Renaissance ETF AIRR with a focus on small and mid-cap U.S. industrial and community banking companies, is expected to benefit and pose some competition to MAGA (read: Welcome Trump Era with These ETFs).

Needless to say, Trump is aggressive in his foreign policy. This puts defense ETFs like Powershares Aerospace & Defense PPA in the limelight. Historically, financial stocks have performed better with Republicans in the White House thanks to their tolerant policies. This scenario makes a financial ETF like The Financial Select Sector SPDR Fund XLF a competitor of MAGA (read: 5 Top-Ranked Sector ETFs Thankful to Trump).

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