given how polarized americans have become it perhaps was inevitable that wall street would get into the act yet you shouldn’t believe that by investing according to your political party affiliation that you will beat the market over the longterm you almost certainly will not politics do not guarantee stockmarket profits despite that at least three exchangetraded funds now cater to investors’ politican partisanship   american conservative values fund acvf according to this etf’s website the fund is an “activelymanaged diversified largecap core etf seeking to boycott as many companies hostile to conservative values as possible”   democratic largecap core fund demz this etf’s website says that the fund is “designed to provide similar risk and performance as the sp 500 spx but it only includes companies that have made over 75 of their political contributions to democratic causes and candidates”   point bridge gop stock tracker etf maga according to this etf’s website the fund “is made up of 150 companies from the sp 500 index whose employees and political action committees pacs are highly supportive of republican candidates” the chart above shows how each of these etfs has performed since inception relative to the sp 500 the chart’s calculations take dividends into account before you make too much of demz’s positive alpha note that it is not statistically significant you shouldn’t be surprised that maga’s and acvf’s alphas are negative and that demz’s is insignificantly positive that’s because there is a longterm cost associated with any noninvestmentrelated restriction on the list of stocks from which they can choose here’s why if either democratic or republican values really did lead to marketbeating performance then wall street managers of both political parties would long ago have wasted no time investing in companies that manifested those values investment managers are some of the most hypercompetitive people you’ll ever meet willing to do almost anything to gain even a basispoint advantage over their rivals if a manager who votes for democrats saw an advantage in investing in “republican” companies he would swallow his political pride and immediately do so the same is true of republicanvoting managers a great example of managers’ cornercutting was provided in a landmark study two decades ago in the journal of finance “leaning for the tape evidence of gaming behavior in equity mutual funds” its authors were mark carhart of kepos capital adam reed of the university of north carolina at chapel hill ron kaniel of the university of rochester and david musto of the university of pennsylvania the researchers found that mutual funds in contention to be at the top of the performance sweepstakes for a given quarter or year will place buy orders on the stocks they already own minutes before the close on the last trading day of that quarter or year their intent is to boost the prices of those stocks and thereby artificially inflate their returns the most these partisan etfs can expect is that their average stock does no worse than the overall market even if they achieve this already modest goal their alpha over time will be negative to the tune of their notinconsiderable expense ratios more than 070 for both acvf and maga and 045 for demz i have no desire to discourage you from investing in any of these politicallypartisan etfs i’m in favor of letting your portfolio be invested in ways that are consistent with your values at the same time it’s magical thinking for an investor to believe it’s possible to do good and do well at the same time furthermore it’s an insult to think we would only invest according to our values if we get paid for it that’s putting an extremely low price on values mark hulbert is a regular contributor to marketwatch his hulbert ratings tracks investment newsletters that pay a flat fee to be audited he can be reached at markhulbertratingscom more new etfs with tickers nanc kruz aim to track lawmakers’ stock buys as ban on congressional trading looks unlikely before midterm elections also the tightening squeeze on corporate profits is the biggest risk to the stock market right now