NEW YORK (AP) — The God Bless America ETF, marketed to “God-fearing, flag-waving conservatives,” outperformed most politically-focused funds in 2024, returning 32.9% compared to the S&P 500’s 26% gain.
The fund, trading under the ticker YALL, benefited from its largest holding in Tesla Inc., whose CEO Elon Musk supported Donald Trump’s election bid. Among eight politically-themed exchange-traded funds tracked by Bloomberg, YALL was one of only three to beat the broader market.
Democratic-aligned funds showed mixed results. The NANC fund, which mirrors trading by Democratic congressional members and their spouses, gained 28.6%. Its Republican counterpart, KRUZ, named after Texas Senator Ted Cruz, returned 14.7%.
Despite some strong performances, politically-focused funds have struggled to attract significant investments. Most remain below the $300 million threshold typically required for institutional investor consideration. Even funds backed by “anti-woke” presidential candidate Vivek Ramaswamy haven’t grown beyond this mark.
“It’s human behavior,” said Itzhak Ben-David, professor at Ohio State University’s Fisher College of Business. “If you read something in the news or see it on TV, you’re probably not the first to notice it. Maybe you’re among the last ones and the price is already reflecting this information.”
Research shows specialized ETFs typically underperform market benchmarks by about 30% over five years. Last year, 2nd Vote Advisers liquidated two conservative-themed ETFs after failing to gain traction.
Arthur Laffer Jr., president of Laffer Investments and former adviser to the closed 2nd Vote ETFs, noted that politically-focused funds are “designed to polarize.” However, he emphasized that successful funds must either generate excess returns or demonstrate risk reduction capabilities.
Despite these challenges, Azoria Partners plans to launch a new conservative-leaning ETF in March.
