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The 'MAGA' ETF is trailing the market for one major reason

October 15, 2020. Summarized by summa-bot.

With less than three weeks until Election Day, President Trump is trailing Joe Biden in the polls. And an ETF whose ticker is the acronym for Trump's famous campaign slogan is lagging the market, too.

The Point Bridge GOP Stock Tracker ETF (MAGA), which trades under the symbol MAGA, is down 8% this year -- in sharp contrast to the benchmark S&P 500, which is up 7%.

Rather, Point Bridge -- the investment firm that manages an index which the fund is based on -- says it invests in 150 S&P 500 companies that have the highest number of workers and political action committees (PACs) that have donated to Republicans in the past two election cycles.

The MAGA ETF's holdings are mostly equally weighted, with no individual stock accounting for more than 1% of its assets.

So why is the MAGA fund doing so poorly?

Hal Lambert, founder of Point Bridge Capital, noted to CNN Business in an interview that there aren't many tech stocks in the MAGA ETF, as Silicon Valley firms tend to support more liberal/progressive/Democratic causes and candidates.

None of them are in the MAGA ETF.

Asked what will happen to the MAGA ETF if Trump loses, Lambert -- who said he's voting for Trump -- did not rule out the possibility of launching a so-called Blue Wave ETF that focuses on companies donating to Democrats.

But he argues that a Biden victory could actually be a good thing for the MAGA ETF because disgruntled Republicans might invest more in it.

And Lambert said the fund will keep the MAGA ticker even if Trump loses.

Still, the poor performance of the MAGA ETF might be a sign that politics and investing don't mix well.

For example, fund company EventShares shut down its Republican Polices and Democratic Policies funds in 2018, opting to combined them with a tax reform ETF to create a new fund called the U. S. Policy Alpha ETF.

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