MAGA: Is the ETF for Donald Trump fans a good buy?

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on Dec 13, 2023
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  • The Make America Great Again ETF tracks companies friendly to conservative causes.
  • The fund has an expense ratio of 0.72%, which is higher than most ETFs.
  • It has underperformed the market over the years.

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The Point Bridge America First ETF (MAGA) is a unique fund that is themed on American Republicans, especially those aligned with Donald Trump. The ETF has done modestly well since its inception in 2017 although it has lagged behind other mainstream funds like SPY, QQQ, and VOO.

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What is the MAGA ETF?

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Republicans and conservatives have been creating services that aim to align with their values. In most cases, these people believe that mainstream institutions like Blackrock and JP Morgan are woke.

As a result, several companies have been formed to care for their needs. Vivek Ramaswamy created Strive Capital to compete with Blackrock while Donald Trump created Truth Social to compete with Twitter.

As such, the Point Bridge America First ETF was created to cater for conservatives who are aligned with the Make America Great Again movement. It tracks S&P 500 companies that tend to lean conservative. 

To do that, the creators looked at companies whose leaders and staff provide most support to Republicans. It also identified some of the biggest companies that donate to Republicans. Some of the most notable companies are Charles Schwab, Marathon Petroleum, FedEx, Alexandria Real Estate, and Valero Energy.

As you would expect, the fund’s composition and weighting is much different than that of the S&P 500 index. For example, it has limited exposure to technology companies, which account for about 30% of the S&P. 

Instead, the MAGA ETF is mostly made up of industrials, financials, energy, utilities, and materials. The biggest constituents are companies like Allstate, Assurant, Garmin, PNC Financial, and WestRock Company. Other notable names are Lennar, Equifax, and Fastenal.

Is the Make America Great Again a good ETF?

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I believe that the MAGA ETF is not a good ETF to buy even for Donald Trump fans. First, MAGA is a relatively expensive fund to invest in. It has an expense ratio of 0.72%, which is much higher than that of traditional funds like SPY, QQQ, and SCHD.

A 0.72% ratio means that it will cost you $720 per year if you invested $100k and the stock went nowhere. In ten years, that is $7,200, which is a lot of money.

Second, MAGA ETF is a relatively small ETF with just $19.2 million in assets. The implication of this is it is a relatively illiquid ETF. According to SeekingAlpha, the average daily share volume is just 911.98. 

Third, MAGA has a history of underperforming the broader market, It has risen by 68% in the past 5 years compared to SPY’s 90%.

maga etf

Finally, I believe that there are other quality, liquid, and cheap ETFs to invest in. Some of the best ones are funds like QQQ, SCHD, SCHG, BITO, and SPY.

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