The Making of MAGA

pretty broad or we've covered several tickers. This is really drilling down into one particular ETF and it goes to the story of how somebody launches an e t F. So it's it's kind of a deep dive into two things at once. And Rachel, which et F is this? This is the MAGA fund MAGA That's that is a ticker, right it is? And I know there's probably a lot of people they're triggered right about now. But before you tune out, this is the make America Great against slogan

and uh connected with Trump. But before you tune out, this is an e t F I think a little ahead of its time. It is basically what's called partisan investing, and I know it might not be where we want things to go, but it's kind of where things are going, and it's sort of trying to divide the stock market into left and right, and this one is on the right side, and you sort of have E s G is more on the left side. And Rachel, this was really your idea. What was it about MAGA that resonated

with you? Why did you want to do this episode? I think it's always interesting when someone comes onto the E t F scene and it's doing something completely different. We hadn't seen anything political in the way of E t F s until this MAGA fund came out. It was really the first to kind of actually propose a strategy in which you buy companies that are donating to Republican candidates. That struck me as a really interesting strategy and I was kind of curious to see whether it

worked and exactly how that idea came about. I think this is a great E t F to drill down too. I actually the ticker to me was just Grand Slam home run, and that doesn't matter with these type of niche E t F s. I have to think this guy might be located down south that where did you have to go to interview him? You wouldn't be wrong. So this involved me getting up at a very very early hour to get a flight down to Dallas Fort Worth.

So how Lambert who has set up point Bridge Capital, he runs the MAGA Fund to give it its full name, it's actually the point Bridge gop stock Tracker e t F, but MAGA is somewhat more catchy. So I met him at his offices in downtown Fort Worth. It's a nice little town. Actually, it's quite sort of historic. There's a nice old center. You've got a kind of old courthouse that's quite pretty, lots of kind of shops and restaurants around. But I obviously chose the worst day to go down

to Texas. It was cold, it was wet, it was windy. Wasn't exactly great timing on my part. And when did he launch the e t F? So the fund started in September UM of twenty seventeen, so we have now had just over six months of performance to to evaluate um. So it seemed like a good time to go down and see how that fund started life and how it's been doing since its launched. This weekend is the man who made MEGA, so I'm here to see how Lambert

on thank you. How looks the consummate conservative professional think open neck shirt, chinos and a plaid blazer and blonde hair wants slightly long and swept back, a look not dissimilar to President Trump's good to see you again again for coming down, Thank you for having me appreciated Hope. His office in downtown Fort Worth has a similar vibe. It's all black, leather and chrome, with a picture of his daughter set on the table next to an award for best e t F ticker from this year's e

t F dot Com Awards. I started by asking him to take me back to the beginning and tell me how he had first come up with the idea for political investing. I was sitting at my desk here in the office that run. I was watching the news, and that morning Target had come out and announced that they were going to allow anyone of any gender to use the dressing rooms and restrooms at their facilities. So how are they identified for that day? They could they could

change in the dress rooms. And I saw this and I was like, Ah, that's going to be very negative for a Target stock. People were upset about it. I've got two daughters, we shop at Target. I mean, they're gonna go buy swimsuits at Target, They're gonna change in the dressing room. It's kind of a weird scenario. This morning, a petition against the retail giant Target is gaining a

lot of momentum. Nearly eight and fifty thou people have already signed a boycott pledge by the American Family Association over targets bathroom policy. People are boycotting Target, and they don't realize they own it in their mutual funds. Once President Trump won and I started seeing more of what was going on politically as far as corporate America, you know, kind of moved into that mode of how do I, how do I capitalize for investors their ability to invest

in companies that have their political views. Once you come up with this idea and exchange trade of funds seemed like the natural solution that The reason I thought the E t F approach was the best way for it was because it's the most scalable in my mind. Clients don't have to have an account at Point Bridge Capital. They can have an account at Schwab, they can have AG account TD maror Trade. They can have an account at ubs basically or wherever they have a brokerage account,

they can purchase it. How's idea to turn his political views into a fund wasn't new, per se. Values based investing has been a rail for years for folks who want to avoid energy producers, tobacco companies, or weapons manufacturers for example. You might have heard these types of strategies called e s G short for Environmental, social and governance or socially responsible, and these types of products have become

all the rage in recent years. But How saw a gap in the market for investors with a different set of values, a conservative set of values. He wasn't coming at this cold. How has been involved in Republican politics more than a decade, most recently running a superpack for Ted Cruise's tilt at the presidency in twenty sixteen, a battle that President Trump and his margas slogan ultimately one. There were the SG funds, and those e SG funds

are typically mostly left. There's nothing out there from the from the conservative or Republican side. But through my work in politics, I realized, you know what really matters is the money in politics. So that's really what I are to do, is see, well, where are they giving their money, because that's really what's determining how people are getting elected and whether people are getting elected, and so that's really what sorry. I was like, I'll follow the money and

see what that leads to. Thus began a series of phone call to find out what it would take to realize his funds and how he would get approval from the regulators for something known as exemptive relief. So I just started calling people and saying, you know, and learning

how to do it. There are different types of incubators out there that can that are kind of turn key approaches to launching e t s. And I basically just learned that market through conversations with people, and I realized that really what I wanted to do was get my own exemptive relief. And then basically I created a timeline. I have a white board over here where I put up on the white board. Okay, what do I need to do first? I mean, if you want to walk, we can walk over to the white board and show

you the white board. So this is the the white boarder which he sketched out kind of the process to market, right, and then I made I made decisions on kind of you can see these are all you know, you've got us bank, You've got cbo how lined up the custodian spoke with market makers and authorized participants to make sure that the fund would trade smoothly on in exchange and that investors could put their cash in and get it out again. But one crucial ingredient was still missing, something

we talk a lot about on this show. The ticker. I decided I knew I wanted the ticker to be MAGA, so I called up my contact at cbo E and said, hey, you know I need to reserve this ticker. Well, they tell me that ticker is already taken. So I was like, oh, but I don't think they're going to use it, so let me let me check with them. Sure enough they were. They said yeah, we're not going to use this ticker.

And I figured they would probably say, hey, you know, give us some money and you can have the ticker. But they didn't do that, so it was pretty nice. It was pretty quick. Actually, within a day or so we exchanged emails. They're like, yeah, we're fine to release it. They felt like the ticker might be a little too a little too hot, but you didn't obviously, like when did you first think that MARGA, that's the ticket for

me obviously after President Trump won the election. That's a campaign slogan, and I just thought that that that ticker would be an interesting way to let the public know that this is a Republican e t F. Were you trying to come up with other alternatives that were up fitted?

I was, And in fact another alternative was GOP and that ticker was taken as well, and that ticker had only been taken if I recall, maybe just a few weeks before before I had called about it, so that ticker was gone, and so I was like, wow, this is um, this could be a problem because I know tickers. Tickers are really important in the t F world. People don't really care what the names are. It's all about

the ticker. So you know, I'll say, well, the names that you know the point Bridge GP, stock Track or e t F, but the tickers MAGA. So that's what That's the way you need to think about it. All told, it took about seven months from making his first calls to starting the fund. Texas based point Bridge Capital was launching its first e t F and it's investing in GOP friendly company. Just understand that you go What about a hundred and fifty companies, with all of which are

sympathetic to Republican causes is brilliant conversation. So how's the fund doing well? It's report card, It's somewhat mixed. The fund has thirty nine million dollars in assets. That's not nothing, but it's somewhat below the million dollars the e t f s typically need to break even. It ended seventeen with strong returns, but those have lagged somewhat this year. It's easy to see why when you look at Margot's holdings.

Remember these are all companies that donate to Republican candidates, and drilling down, you can see that the portfolio is heavily tilted towards oil and gas companies. This means that the fund thrives when energy does well, but it also suffers when the sector struggles. The opposite is true of technology, in which the and is very underweight. But Margaret also

owns some companies that might give conservatives pause. Berkshire Hathaway and Goldman Sachs, both one by CEOs that have expressed socially liberal views in the past, are also in the mix. I asked how how investors react when they learned that these companies are part of the Market Fund. You know, you can have a CEO that's a Democrat, you can have a CEO that's that's a big liberal, and they

can spout off about things. Lloyd blanklynd talking about Donald Trump's Twitter doesn't affect things as much as Goldman sacks pack giving money to Republican candidates. So I'll take the I'll take the dollars given all day long over an interview where he criticizes somebody. So I think companies say things publicly and then they do things differently than what they're saying publicly. I found this argument particularly interesting. On the one hand, it makes a lot of sense. Money

is something far more tangible than talk. But it also seems to contradict one of Hall's pitches to possible buyers, namely, the companies like Target, for example, damage their share price when they express liberal political views. Using his methodology, the fund still owns some of these companies. It also made me wonder how much you can tell about companies ideology

from the dollars it donates. To dig into this further, I turned to Michael you Seem, a professor of management at the University of Pennsylvania's Wharton School, who researches leadership and decision making. His business giving ideologically driven that as you want to support parties that say advocate policies you

want yourself or is it access driven? You want access to individuals who especially are in positions of chairs of House and Senate committees and most top executive money it was long gone to the Republican Party, no surprise there, but there are periods where more than half of the pack money over which they preside actually goos two Democrats. There's also the cost. The fund charge is seventy two basis points or seven dollars and twenty cents for every

one thousand dollars invested. That's significantly higher than the average of forty nine basis points for e t f s in the US. So why might an investor decide it's the right product for them? To find out? I spoke to another academic, Mayor Stateman, who specializes in behavioral finance at Santa Clara University. In finance, we have a tendency to separate the production of returns from their consumption. That is,

we say, first, make the most money. However, whatever it takes, then use it to buy stuff to satisfy you or to support the causes that you want. And and that is silly, because finance just just made itself very narrow and saying the goal must be getting the highest return, because like the expressive and emotional benefits of being true to their values, not just pretending to be true to their values. I asked, how about this motivation, whether it could be one of the reasons people buy his fund.

I'm not sure how much people are making investments bit necessarily based on being part of a club, but I mean i'd certainly be happy for that. And I think that, you know, friends do tend to talk to each other at cocktail parties, Hey what are you buying? What are you looking at? From a you know, investment standpoint, So hopefully we'll get to the point where that's a topic that comes up. I'd certainly welcome it. Why do you think people get more upset about politics these days, that

polarization is a positive thing or a negative thing. Well, I don't think necessarily polarization is a good thing. I think it's great for people have different views. I wish people would then be able to still be friends and and have the different views, right, So I guess I asked, because I mean, is there a argument there that you know, something like the Marga Fund is sort of capitalizing on that polonization. I don't know that. I would say it's

capitalizing on it. I'd say it's giving it investors a vehicle that they haven't had as a way to invest based on things based on political views. So capitalizes and necessarily the right word for it, I'd say it's more trying to keep create an opportunity for people to do something that they don't have. Did you know there are a lot of company who heavily support liberal politicians like Hillary by donating millions to Democrats. There's now a way

to invest without owning these stocks. How Lambert and his company point Bridge Capital created the first. Now that his fund is up and running, How's main focus is on making investors aware of it in that he has a different approach to many of the larger firms, taking spots on conservative talk radio for example. And of course the

ticker is MAGA. MAGA m A g A Go to invest politically dot com and learn about MAGA and lets you own the top One thing I'm doing differently than most E T F s is I'm not trying to go out and have a bunch of wholesalers hit the different brokers houses. I think mine, mine is going to be driven more by investors calling up and saying I want to buy this, versus necessarily their advisor calling them and saying, hey, you should buy this. You know, I've

had someone say to me. I think they said to me, yeah, you know, that's a that's a really interesting niche product. I'm like, well, you know, it's really not niche. Since sixty million people voted for Donald Trump, you know, so there's a big market out there. Certainly found some high profile support among House political colleagues since President Trump's intuguration. I know Don JR. Now, so I didn't know him prior, but we've become acquainted and I don't know, I guess

we could say we're friends. What does he think of the margarite TF? Oh he likes it. Yeah, he told me he likes it, like he loves the idea, and I think he's a fan. How about your whole boss head craze. He likes it, he likes the idea. I don't know if he's bought it. I'm you know, I'm gonna have to call up, you know, his wife. His wife's in the investment field. So I think I need to talk to Heidi and say, hey, you need to look into this a little more. Have you put your

money into it? Oh? Yes, you know all of my liquid retirement is in it. My mother's in it, my wife's in it. There was just one final thing I needed to know before leaving, how and for worth? Do you have the hat? I have a I'll tell you what I have. I have a maggot e t F hat. I'll show it to you before we leave. But I do have a red hat that I that I've made up that says magat et f on it. It's kind of your own, that's my own. It's my own brand of the of the hat. Yes, not the Trump happened,

not the actual Trump hat. But in fair I'm not a big slogan guy. I don't have a I don't have a Ted Cruise had either. I don't have I didn't do a lot of the slogan stuff. Now you're in the business, I know now I need to I know I've had to revamp my thoughts on that Rachel, what do you think the biggest takeaways for you were?

The biggest takeaway from me was really just that this isn't a very interesting idea that that kind of, you know, the fact that you can try and invest in a way that aligns with your political values I thought was

a really novel concept. I'm not sure whether it's something that um I necessarily think is a great development for the world per se in that I think, you know, when you look at where things are politically these days, you know, we have so much polarization between right and left, and whether the right and left talk to each other

enough anymore, I think is an area for debate. I do wonder whether you know, when you get into investing politically as well as kind of donating politically or going to rallies, whether that kind of takes that polarization one step further. But I think the idea about investing according to your political values as well as you know, maybe your morals or or know whether you think that energy stocks are going up, or whether the government's going to build roads in your your town, I think that's an

interesting idea. I mean, the part that interests me a little bit. It's just that if if you want to build it, you can build it. And if it works, it works, and if it doesn't, it doesn't. And like if somebody wants to invest in that, they can invest in that. But here's this guy who had an idea, anyone out and did it right. I mean, that's when you can look at the e t F marketplace. It's a democracy. It's not something that necessarily you have to kind of be coming from a black rock or a

vanguard to get success. If you have an idea and you go through the right kind of process, you can see your fund realized and then it's up to the marketplace whether it succeeds. I'm a little more bullish on the ETF then I think most people for two reasons. One, if this thing starts to become something that Sean Hannity or the conservative crowd starts talking about, you know, every time somebody on the left says something bad, they want to boycott the other side. This is a way to

act with your dollars. And if it starts making its way in conservative circles, that's half the country as an audience. The second thing is this is heavy energy and industrials and has no tech. If the fang stocks crumble, they've had a few like hits, but they're back if they crumble. This thing has a lot of stocks that are more on the value side, and if it starts to outperform and ripped past the SMP five hundred, it could it

could get assets just because it's outperforming. So it's got a couple of things that could garner assets that are legitimate in my opinion. Yeah, that's one thing that that how mentioned to me is that when he ran kind of back tests on on this fund and kind of how it performed in the past, I can pleasantly surprised to find that it didn't really correlate with the SMP five hundred, which when obviously you're using the SMP five hundred as your base universe, you'd expect that potentially to

be more overlapped there. But it seemed that, you know, there is either outperformance or under performance. It's not really just tracking the SMP. At the beginning we talked about how E s G sort of on the left side of the map and MAGA might be on the right. It really shows in the numbers. If you look, there's only eight percent overlap between the two big E S G t F S and MAGA. That is not a

lot considering they're both large caps. I personally think of E. S G went and sort of called itself liberal values. I think it might get off the ground faster and just recognize that's its audience anyway. But anyway, this is ascinating to see if the stock market continues to get divided via politics. Pretty crazy also that somebody had the ticker and relinquished it. You don't know who actually had

the ticker. Wasn't the guy who There's another issuer who has GOP and dem how to tell me, and he wouldn't name names, But I mean, it's it's interesting that you pick on that because for my understanding of it, you know, when you have a t f issuers out there that are pondering different ideas and come up with, you know, a three or four even five less kind of word that seems like it might encapsulated investment thesis, you can go out and you can reserve that ticker

with the exchanges for a certain period of time. Yeah, just seems like the land grab somebody has just got to be land grabbing this like dot com era you are else? Yeah, I remember back where Bill Gross first came out. His e t F was t r x T or something really bad, and eight months later he got bonded, which was smart. Maga. I'm a little shocked,

just because partisan investing is very new. I we were just talking before we started, how I remember two years ago this kind of thing just would have entered my head in covering ets as an option. Even right now, nobody was doing this. We're talking about this kind of thing. I think it really wasn't until this past selection where it's become more obvious. In a way. I think it's a good point. I mean, I think society generally has

become more political. If you look at the news stories that you know, we as reporters are covering on a daily basis, so much of the stock market moves are driven by politics these days. You know, you can't really write a story without incorporating something that President Trump or the Cabinet or Congress has said or done, because it's impacting how the markets move on a much greater level, I think, in this administration than than some of the

ones immediately previous. So when it comes to politics being part of our daily lives, it's more and more present, Rachel, thank you so much. Just love the fact that you're with us in and doing cool stuff like this. Thanks joining us only, Thanks happening. Thanks for listening to Trillions. Until next time. You can find us on the Bloomberg term, rnol, Bloomberg dot com, Apple Podcasts, and whoever else you want to listen to us. We'd love to hear from you.

We're on Twitter. She's at Rachel Evans Underscore Inn Why I'm at Joel Weber Show. He's at Eric Falcunas. Trillions is produced by Magnus Hendrickson. Francesco Leady is the head of Bloomberg Podcasts. Bye.