Politics to profits: Brothers launch new investing concept on Wall Street

The 2016 presidential election cycle set people talking. Some conversations were about race and gender. Others focused on health care or international trade agreements.

But the conversation between Matt Clements and his younger brother Jon was about opportunity.

“Matt and I were talking about it and [realized] there’s going to be a real clear-cut set of companies who are going to benefit if Donald Trump gets in the White House and vice versa if Hillary Clinton gets in the White House,” Jon explained. “Why is no one building these portfolios for everyday investors to utilize?”

So the brothers — both Notre Dame Regional High School and University of Missouri-Columbia grads — built EventShares to offer actively managed, exchange-traded funds.

“[It’s] similar to a mutual fund,” Matt said. “Think of it as a basket of just stocks. You put IBM in there, you put Coca-Cola in there, you put any type of stock you can think of in there, and then it itself trades based on the underlying value of those stocks. So it should be, if it’s trading correctly, at the net asset value ... so if Coca-Cola is up big one day, the ETF should be up big as well.”

The brothers had noticed an increased interest in so-called “thematic investing.”

“People want to invest behind different ideas or different beliefs or sectors or thoughts,” Jon said. “And nobody had really ever brought a political thematic investment product to the marketplace.”

So they introduced EventShares Republican Policies Fund and EventShares Democratic Policies Fund (ticker symbols GOP and DEMS, respectively), as well as the tactical tax policy ETF EventShares U.S. Tax Reform Fund (TAXR).

The Republican-focused ETF portfolio comprises of stocks that stand to gain from conventional Republican policy aims, and vice versa for the Democratic-focused ETF.

Matt used Kansas City Southern, a Kansas City-based railroad, to illustrate the principle.

“Trump was really negative on the peso. Really negative on NAFTA. And [Kansas City Southern has] about 49 percent of their revenue from Mexico,” he said. “So if NAFTA was renegotiated, if a wall was put up, it makes it more complicated for them. [Trump] won and Kansas City Southern was down, I believe, was down 10.8 percent.”

While Kansas City Southern stock was sinking, better-positioned competitors stood to gain. EventShares products, the brothers said, are designed to help investors capitalize on the far-flung market ripples caused by political action.

The ETFs went live Tuesday.

“It was an absolute thrill for us,” Matt said. “We’ve been working on this for the past 14 months.”

“There was quite a bit of volume in the funds yesterday,” Jon said. “People were buying quite a bit of shares.”

While the company is at this time focused on marketing the three existing ETFs, Jon said another — focused on Brexit action — is in the works. Others, based on health care or Wall Street regulation also are a possibility down the road.

“I think the company will continue to evolve,” he said. “We’re just continuing to work as many hours a day as we can and tell as many people in as many ways we can about the product. There is, Matt pointed out, no shortage of economic ramifications caused by political movement.

“Every four years, elections come and go, but outside of those years, there’s still government policy being made,” he said. “Washington, D.C., continues to evolve. ... Connecting Washington, D.C., to the stock market is a real goal of ours. It’s extremely exciting, the opportunity to build your own business and determine the way to take it. It’s something that’s differentiating, and it’s exciting to us.”

More information about the ETFs are available through the company website, eventshares.com.

tgraef@semissourian.com

(573) 388-3627