An ETF battle
Running Point and its chief investment officer, Michael Ashley Schulman, CFA were quoted by U.S. News & World Report in an article — by reporter Tony Dong, “How to Track Congressional Stock Picks With These 2 ETFs” — regarding our thoughts on NANC and KRUZ, ETFs designed for those looking to mimic the public investment moves of federal U.S. lawmakers.
Quoted article excerpts are below:
Since their inception, NANC has notably outperformed KRUZ, delivering a return of 22.9% compared to 11.3% for KRUZ, largely due to the former’s significant position in technology and growth stocks, which have excelled in 2023. In contrast, KRUZ’s higher allocation of energy sector and value picks have lagged.
“NANC’s better performance can be explained by its higher weighting to hot tech sectors like software, internet, computers and semiconductors, versus KRUZ’s top sectors, which include retail and oil and gas and lower weightings to software and semiconductors,” says Michael Ashley Schulman, partner and chief investment officer at Running Point Capital.
What Experts Think About NANC and KRUZ
“Successful investing typically employs a long-term approach based on fundamental analysis and diversification; thus, mimicking the short-term trading activities of members of Congress may not align with your investment principles and could lead to anomalous outcomes,” Schulman notes.
While he finds both ETFs interesting, Schulman also expresses skepticism about the long-term execution of their strategy, pointing out several potential issues, including the delay in PTR filing and the ETFs’ rebalancing response to these filings.
“Furthermore, since the ETFs seem to rebalance based on the size of trades, wealthier politicians may have more of an undue influence than less wealthy politicians because more affluent politicians may naturally trade more stock and in higher valuations,” he says.
August concurs with Schulman‘s cautious stance, noting: “While the concept is intriguing, timing is crucial for maximizing returns and mitigating risk. I will continue to monitor ETFs like NANC and KRUZ, but until real-time disclosures are a requisite, retail investors should refrain from heavily relying on emulating congressional trades.”
There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our Constitution.
John Adams, second President of the United States
Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-24-32
