EventShares launches US policy ETFs

Oct 17th, 2017 | By | Category: Equities

EventShares, the ETF brand of Active Weighting Funds, has launched three new actively managed ETFs on the Bats Exchange. The Republican Policies Fund (GOP), the Democratic Policies Fund (DEMS) and the US Tax Reform Fund (TAXR) select their holdings based on US government policy themes and can take long or short positions in US securities.

Active Weighting Funds launches three politically-focused ETFs

The ETFs allow investors to take a view on US politics.

Ben Phillips, CIO of EventShares, commented: “As we have seen in dramatic fashion since last year’s US presidential election, government policies can have a significant impact on the markets in both the short and the longer-term.

“Our funds are the first to provide a broad-based vehicle for investing in these themes as embodied by the policies of the two major American political parties, which often have divergent views on healthcare, infrastructure and defense, among other areas. Our research seeks to identify winners and losers on a company-level, based of specific policy outcomes, and to build portfolios accordingly.”

GOP and DEMS will hold long positions in securities thought to benefit from the policies of the political party in question while shorting securities believed to be hurt by the policies of that party. Political party beliefs and executive and legislative priorities are considered, as well as both federal and state levels of government.

At present, Active Weighting Funds states that Republican party policies include decreasing regulation of the financial sector, increasing the US government budget allocated to the aerospace and defense industry, reducing regulations on drilling and production functions in the energy industry, and decreasing the US corporate income tax rate.

Democratic party policies include increasing the ability of individuals to attend higher education, increasing the wages and income of US workers, reducing the regulations around clean and renewable energy, and increasing the availability of health insurance.

TAXR takes long positions in securities thought to appreciate in value as a result of current tax reform themes observed in US politics, and takes short positions in securities thought to depreciate in value due to current tax reform themes.

Each portfolio will range in size from 30 to 75 securities, and constituents will be equally weighted in the portfolio. Constituents can be equities, equity sectors or fixed income securities. GOP and DEMS both have an expense ratio of 0.75% while TAXR has an expense ratio of 0.85%.

Phillips added, “ETFs provide a great vehicle for investors who may want transparent, low-cost exposure to the potential impact of specific policies. Adding the active component allows us to manage the funds dynamically, in keeping with constantly changing fortunes of the political parties, and rapidly evolving events.”

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