When Congress Trades Stocks, Should You Follow? An ETF That Does

The idea sounds intriguing: buy an ETF that follows congress and you get instant access to the same stocks that U.S. lawmakers are buying and selling. But here’s the catch—just because politicians have access to legislative information doesn’t make them savvy investors.

The Political Inside Track: Why Congressional Trading Became Controversial

Members of Congress trade stocks regularly, and unlike ordinary investors, they often have early visibility into pending legislation or regulatory decisions that could affect markets. A senator voting on healthcare policy, for instance, might know months in advance how a vote will swing, giving them an informational advantage on pharmaceutical stocks. This reality sparked outrage among transparency advocates and ethics watchdogs, leading to calls for bans on Congressional trading altogether.

Yet the practice persists. And rather than fight it, some financial innovators decided to capitalize on it. If politicians are trading, why not let the public trade alongside them?

Two New ETFs Tap Into Congressional Trading

Enter two exchange-traded funds created to do exactly that: track the buying and selling patterns of Democratic and Republican members of Congress. The Unusual Whales Subversive Democratic ETF (ticker: NANC, named after Nancy Pelosi) and the Unusual Whales Subversive Republican ETF (ticker: KRUZ, after Ted Cruz, though later changed to GOP) both launched in February 2023. Each charges an annual expense ratio of 0.74%, meaning $7.40 per year on every $1,000 invested.

These aren’t passive index funds that simply track a broad market benchmark. Instead, they actively monitor public records of Congressional stock transactions and adjust their holdings to mirror what lawmakers are buying and selling. This requires frequent portfolio adjustments—the Democratic ETF has a turnover rate of 62%, meaning it churns through holdings aggressively throughout each year.

The Divergent Paths: Democrats vs. Republicans in the Stock Market

Since their February 2023 launch, the two ETFs have followed remarkably different trajectories. As of late 2024, the data told a striking story:

The Democratic-tracking ETF delivered year-to-date returns of 13.52%, besting the Republican version’s 12.73%. Over the past year at that time, Democrats pulled 20.33% gains compared to Republicans’ 15.37%. For the full year 2024, the Democratic ETF surged 26.83% while the Republican ETF returned 14.45%.

For context, the benchmark Vanguard S&P 500 ETF returned 11.44% year-to-date, 17.75% over the past year, and 24.98% for 2024. The Democratic ETF outpaced the broad market benchmark; the Republican version lagged it.

What Are These Politicians Actually Buying?

The Democratic ETF concentrates heavily on mega-cap technology: Nvidia claims 10.45% of the portfolio, followed by Microsoft at 7.93%, Amazon at 5.20%, Alphabet at 4.29%, and Apple at 3.71%. These holdings explain much of the ETF’s strong performance—these are the stocks that have powered market gains over the past two years. In fact, most of the “Magnificent Seven” tech leaders appear prominently in the Democratic portfolio. The ETF holds 149 different stocks total, but the top 10 stocks represent nearly half the fund’s value, creating significant concentration risk.

The Republican-focused ETF tells a different story. Its top holdings include Comfort Systems USA, JPMorgan Chase, and AT&T—more financial and industrial companies mixed in with some tech exposure. Nvidia still appears, but at a much smaller 3.49% weighting. The Republican portfolio shows less concentration (143 stocks, with the top 10 representing about a third of value) and includes energy plays like Chevron and utility exposure through National Fuel Gas. This diversification offers modestly higher dividend income, though both ETFs yield less than 1% annually.

The Critical Question: Should You Invest in These?

Here’s where the investment case unravels. Yes, lawmakers often have legislative foresight that shapes their trading. But possessing information about policy doesn’t automatically translate into investment acumen. A senator who knows a healthcare bill is coming doesn’t necessarily understand biotech valuations or market cycles.

Moreover, Congressional trading is ultimately a niche strategy with a very short track record. We don’t have even three full years of data yet, making performance assessment premature. The fact that the Democratic ETF outperformed doesn’t necessarily signal skillful stock picking—it might simply reflect that lawmakers happened to hold tech stocks when the entire tech sector boomed.

Compare this to proven alternatives: a simple Vanguard S&P 500 ETF provides decades of auditable returns, lower costs (0.03% expense ratio versus 0.74%), and eliminates the guesswork about whether politicians can pick winners. For investors seeking higher growth, numerous established growth-focused ETFs offer substantially longer track records and lower turnover.

The allure of following Congressional trades is understandable. These funds let you peek into the strategies of people with informational advantages. But information advantage doesn’t equal investment success. Unless you believe that U.S. lawmakers possess genuine stock-picking talent separate from their legislative insight, betting your portfolio on this emerging fund category seems premature and risky.