Trading and investing platform eToro has today launched three new Smart Portfolios, including one that copies Congress members’ stock buys. The portfolios, launched in partnership with investment research platform Quiver Quantitative, will all tap into publicly disclosed government data, helping retail investors to harness this information.
Public disclosures have revealed US politicians making stock trades around key events in recent years. Examples include right before the COVID-19 lockdown, Russian invasion of Ukraine, Silicon Valley Bank’s collapse, and Nvidia’s stock surge. To mimic their strategies, the Congress-Buys portfolio will include the top 10 stocks recently bought by Congress members based on the size of the purchase.
How can you trade like a US Congressman?
The Lobby-Spending portfolio will include companies with rising lobbying expenditures. The DC-Insider portfolio consists of firms frequently traded by Congress members, spending a large amount on lobbying, and holding a significant number of government contracts.
Investors are becoming increasingly interested in understanding the inner workings of the US legislature. Public data about which companies are hiring lobbyists to influence lawmakers to pass favourable policies, and which companies are landing lucrative government contracts can be valuable when forming investment strategies.
“Federal law requires Congress members’ stock trades, companies’ lobbying expenditures and government contracts to be disclosed, but it can be difficult for retail investors to scrape and analyse this information in a simple way to support their investment decisions,” said Gil Shapira, Chief Investment Officer at eToro. “By leveraging Quiver’s bank of aggregated data and analysis, we can harness insights from US government activity and make them accessible to eToro users through innovative strategies.”
Details of the three portfolios are as follows:
- Congress-Buys: copies the top 10 stocks bought by Congress members in the past 100 days based on the reported size of the purchase. Initial allocation includes stocks such as Nvidia and Simon Property Group.
- Lobby-Spending: comprises 10 companies with the most quarter-on-quarter growth in US federal lobbying expenditures. Initial allocation includes stocks such as eBay and Roblox.
- DC-Insider: includes companies who spend a large amount on corporate lobbying, have a significant number of government contracts and are frequently traded by Congress members. Initial allocation includes stocks such as AT&T and Ford Motor.
How does it work?
eToro and Quiver Quantitative scrape public disclosures to create these strategies. Each portfolio rebalances monthly to reflect the latest data via the STOCK (Stock Trading on Congressional Knowledge) Act 2012. This requires US Senators and Representatives to publicly file and disclose any financial transaction, including stock trades, within 45 days of its occurrence.
Meanwhile, the Lobbying Disclosure Act 1995 requires lobbyists in the US to disclose information about their activities. This includes their clients, which issues they are lobbying on, and how much they are being paid. Official federal spending information, such as government contracts with public companies, can be found on USASpending.gov.
eToro’s range of Smart Portfolios offer exposure to various market themes. Bundling together several assets under a defined methodology, and employing a passive investment approach, they provide long-term investment solutions that offer diversified exposure. Initial investment starts from USD$500. Any investors can access tools and charts to track the portfolio’s performance. eToro’s social feed will keep them up-to-date on developments in the sector. Not available to US users.
