Look at the performance of just about any market-beating exchange-traded funds (ETF) these days and they will likely have one thing in common: AI chipmaker Nvidia (NASDAQ:NVDA) will be a core holding in the portfolio.

That’s the case with the Unusual Whales Subversive Republican Trading ETF (NYSEARCA:KRUZ), an ETF that since its inception exactly two years ago, is handily outperforming the S&P 500 by more than 50%.

Nvidia is the third largest position in the ETF, though it represents less than 2.8% of the total. What the fund really has going for it is congressional insider trading.

The KRUZ ETF follows the stock trades of Republican members of Congress and their spouses as disclosed pursuant to the Stop Trading on Congressional Knowledge Act (STOCK Act).

As you can see just by the name of the bill, it has long been suspected that representatives and senators have been using non-public information gathered from their oversight duties of the companies to buy and sell stock. Although they pinky-swear they are not using insider information, let’s just say their ability to outperform the market is uncanny.

A peculiar record of success

Both Republican and Democratic congressional representatives fight hammer and tong against banning them from investing in stocks while serving in congress. Rep. Dan Crenshaw once complained, “Ya don’t let us trade stocks. Don’t let us make any money either…we haven’t gotten a pay raise since 2008.”

Representatives earn $174,000 a year, or nearly three times the national average, plus receive numerous benefits and perks at taxpayer expense.

Former House Speaker Nancy Pelosi is often held up as one of the best stock pickers ever, outperforming even Warren Buffett by a margin of 4-to-1 over the past decade. 

There is also an Unusual Whales Subversive Democratic Trading ETF (NYSEARCA:NANC) with the cheeky ticker symbol NANC as an homage to her investing prowess. Its performance is even better than KRUZ, racking up 60% returns since inception.

Last year, though, Pelosi was only the 10th best politician-investor, generating returns of 70.9%. Unusual Whales data shows that Republican Rep. David Rouser topped the charts with 149% returns. In fact, of the top 34 politicians with positive returns last year, 21, or 62% of them were Republicans. 

All bark, no bite

This remarkable track record spawned the Subversive ETFs and it might not be a bad addition to your portfolio.

Unusual Whales managers point out STOCK Act filings are filed with either the Senate Office of Public Records or the Clerk of the House of Representatives. They are made available online pursuant to the Ethics in Government Act. The limitations of following these trades, of course, is that the representatives aren’t updating their constituents in real time. They have between 30 days and 45 days to file their reports, and because the STOCK Act has no teeth (just a $200 fine for filing late), representatives routinely ignore the deadlines.

Also, the dollar amount ranges for purchases and sales are wide enough to make the ETFs job of matching the transactions more difficult. But with those caveats out of the way, the ETF’s performance shows the effectiveness of matching congressional trades.

A portfolio of opportunity

The top five holdings of the Subversive Republican Trading ETF as of Feb. 11 are:

Stock	No. of Shares	Value	% of Net Assets
JPMorgan Chase (NYSE:JPM)	9,693	$2,627,190	4.65%
Comfort Systems USA (NYSE:FIX)	4,298	$1,998,226	3.53%
Nvidia	11,675	$1,559,430	2.76%
AT&T (NYSE:T)	57,201	$1,422,017	2.52%
iShares Bitcoin Trust ETF (NYSEARCA:IBIT)	25,368	$1,404,880	2.49%

^{Data source: Unusual Whales Subversive Republican Trading ETF prospectus.}

In addition to just owning a top-performing security in your portfolio, owning the ETF can also provide an excellent way to stay on top of policy decisions that may affect a company you own stock in.

If a politician is buying shares hand over fist in a stock, it may mean there is something afoot that will benefit its bottom line.

For example, on Jan. 14, Pelosi purchased 50 call options  of Tempus AI (NYSE:TEM) that had a strike price of $20 and an expiration date of Jan. 16, 2026. She purchased between $50,000 and $100,000 worth. The trade was disclosed three days later. Since that purchase, though, the value of her trade has rocketed 114% higher. 

Fortuitously, almost three weeks after her purchase, Tempus announced it was buying genetics testing lab Ambry Genetics, a very complimentary acquisition which sent TEM shares soaring. Pelosi has already made the equivalent of her annual salary. 

Key takeaway

Like many ETFs, the Subversive Republican Trading ETF is a good way to diversify your portfolio across numerous stocks, industries, and geographies. But you should also gauge your own risk tolerance before investing in this or any ETF or stock. 

Also, check the portfolio against your existing holdings. You may find it actually overweights your portfolio in a single stock or sector that may require rebalancing afterward.

The changing political landscape could also change how stocks — or politicians — perform. There are ethical issues surrounding politicians investing in individual securities, and a prohibition might eventually be enacted. In the meantime, though, the KRUZ ETF could be a way to capitalize on inside information yourself — just in a legal way.

 

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