home Latest News President Trump Reveals His Stock Market Investments, Here's What We Learned – Forbes

President Trump Reveals His Stock Market Investments, Here's What We Learned – Forbes

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With President Trump’s recent financial disclosure of payments to his personal lawyer, he also shared the latest detail on his investment holdings. So what is the latest on how President Trump is invested? Well, as expected, the bulk of Trump’s wealth is held across a number of companies including hotels, brands, golf courses and media and, in fact, there are many details the disclosure does not provide.

Nonetheless, the report does also detail Trump’s investment holdings across different trusts. These trusts are currently managed by J.P.Morgan since the President is not involved investment decision making process. These investments are likely a much smaller portion of Trump’s overall wealth than some of his business interests, nonetheless, looking at the portfolio composition and fund selection yields some insights.

U.S. President Donald Trump speaks during a meeting with California leaders and public officials in the Cabinet Room of the White House in Washington, D.C., U.S., on Wednesday, May 16, 2018. Trump continued to defend the lifeline he offered to Chinese telecom-equipment maker ZTE Corp., insisting trade talks with Beijing are just getting started. Photographer: Olivier Douliery/Pool via Bloomberg

Tracking The S&P 500

Trump’s investments in the market are not all that unique. One of the larger holdings across Trump’s various fund holdings is the SPDR S&P 500 ETF, which is a very popular fund tracking a very popular index. This is a liquid and inexpensive and way to track the largest U.S. firms, however, it costs 0.09% a year, and both Vanguard and iShares operate essentially equivalent funds for 0.04% or less, so Trump is likely over-paying, given that this is a passive investment product and results across all three trackers will typically be similar except for costs.

The President’s investment portfolio in the financial markets, consists almost entirely of various funds, there is virtually no direct ownership of specific stocks and it appears many smaller stock holdings are being sold down. However, though the S&P 500 tracker may be slightly more expensive than it needs to be, as we’ll see there are other more expensive funds within the portfolio.

Despite his America first message, the President is not solely invested in the U.S., many funds are held that track other developed markets from the U.K. to Japan. Nonetheless, the portfolio is focused mostly on developed countries, there does not appear to be material exposure to emerging markets such as Brazil or China within the stock portfolio, bonds are also not significantly represented, but the President does hold some gold.

Relatively High Fees

President Trump’s portfolio also contains some relatively high fee products. For example, a material holding is the J.P. Morgan U.S. Large Cap Core Plus Fund, which has fees of approximately 0.8% per year. It’s an active fund and has lagged its index over the past 5 years. The Neuberger Berman Multi-Cap Opportunity Fund is also a material part of the portfolio and carries a similarly high fee with relatively average performance in recent years. The Dox and Cox International Stock Fund is also owned with a fairly high expense ratio of 0.63%. Therefore, again it’s possible that the President is overpaying for certain of these funds given recent mediocre performance.

Research suggests that paying these high fees can be a drag on performance, especially when lower fee products are available. This is because, in aggregate, active funds must match the performance of the market. For every winner there is a loser, investing is a zero-sum game and every trade has two sides to it.  However, we cannot see certain details such as the tax basis of the positions, and, in certain cases, it may make sense to hold onto a more expensive fund if it also has a significant unrealized capital gain that would be payable on sale.