DC-Insider SmartPortfolio: A Political-Informed Investment Strategy on eToro

NexxtGen Markets
May 6
5 min read

In today's interconnected world, politics and business often go hand in hand. The DC-Insider SmartPortfolio on eToro seeks to leverage this connection by tracking the performance of companies that hold significant political influence. By focusing on key areas like corporate lobbying, government contracts, and congressional stock trading, this portfolio offers a unique way to invest in companies that are not just performing well in the market, but also benefiting from political activity and government spending.

Through Quiver Quantitative, the strategy uses data from government disclosures to identify and analyse companies with strong political ties and influence. This portfolio aims to capture the long-term benefits of politically active companies, with the idea that they have a higher likelihood of success due to their substantial involvement in lobbying efforts and government contracts.

How the DC-Insider Strategy Works

The DC-Insider strategy tracks the performance of companies that play an active role in the political landscape. By examining factors such as corporate lobbying, government contracts, and congressional stock trading, the strategy seeks to identify companies that are benefiting from political influence. Here’s how it works:

Data Collection: Quiver Quantitative scrapes government disclosures to gather data on political lobbying, government contracts, and congressional stock trading. This data provides insights into which companies are receiving significant amounts of government funding and how they are politically connected.
Sub-Scores: For each of the three key factors — corporate lobbying, government contracts, and congressional stock trading — companies are assigned sub-scores based on their percentile ranking among other companies. These sub-scores reflect the level of political involvement of each company.
Weighted Score: The sub-scores are aggregated into a weighted score for each company. This weighted score is used to determine the companies that will be included in the portfolio.
Portfolio Construction: The portfolio aims to mirror the sector exposure of the S&P 500, while focusing on the most politically influential companies within each sector. Companies are selected based on their political activity, and the portfolio ensures that there is no overrepresentation of defence companies. The number of stocks selected from each sector depends on the S&P 500 sector allocation:
- For sectors with more than 10% weight in the S&P 500, 3 stocks are selected.
- For sectors with a weight of 5-10%, 2 stocks are chosen.
- For sectors with less than 5% weight, only 1 stock is included.
Monthly Rebalancing: The portfolio is rebalanced every month, ensuring that it remains aligned with the political influence of companies as well as the S&P 500 sector allocation.

The Focus on Political Influence

The DC-Insider portfolio is distinct from traditional investment strategies because it incorporates political and governmental factors in the investment selection process. Here's why these factors matter:

Corporate Lobbying: Companies that engage in extensive lobbying efforts often have a seat at the table when it comes to influencing government policies. These companies may be better positioned to receive favourable treatment or government contracts, making them more resilient during times of political and regulatory changes.
Government Contracts: Many companies derive a significant portion of their revenue from government contracts, particularly in sectors such as defence, healthcare, and technology. By investing in companies that secure government contracts, the portfolio targets companies with a strong foundation and long-term growth potential.
Congressional Stock Trading: The trading activity of U.S. politicians has long been a source of interest for investors. The DC-Insider strategy tracks congressional stock trading to identify which companies are benefiting from politicians’ personal investments and how this information could indicate future stock movements.

These factors together form a picture of corporate influence in the political world, which can provide an edge when making investment decisions.

The Advantages of the DC-Insider Strategy

Informed by Data: The strategy uses real-time data and government disclosures, which means it is data-driven and grounded in quantitative analysis. This reduces the reliance on subjective opinions and offers a more objective way of making investment decisions.
Sector Diversification: By mirroring the sector exposure of the S&P 500, the DC-Insider portfolio ensures that investors are getting broad exposure across various sectors. At the same time, it focuses on politically influential companies, which can potentially outperform during periods of political volatility.
Risk Management: The portfolio is designed to minimise risks associated with political lobbying and government contracts. It avoids overweighting defence companies and ensures a diversified portfolio by balancing the number of stocks from each sector based on their S&P 500 weightings.
Long-Term Approach: The strategy doesn’t try to capture short-term market movements. Instead, it focuses on long-term trends, selecting companies that are likely to perform well due to their political ties and government support. This makes it suitable for investors looking for consistent, long-term growth.
Rebalancing and Adaptation: With monthly rebalancing, the portfolio can adapt to changes in political influence and market conditions, ensuring that it remains aligned with current trends and maximises long-term returns.

Who is This Strategy Suitable For?

The DC-Insider SmartPortfolio on eToro is best suited for long-term investors who want to capitalise on the influence of politically active companies. It’s an innovative way to invest, as it combines both financial data and political insight to build a resilient portfolio.

This portfolio could appeal to investors who:

Want to diversify their portfolio by investing in politically connected companies.
Are looking for a data-driven, quantitative approach to investing.
Have an interest in companies that benefit from government contracts and political influence.
Seek a long-term investment strategy with monthly rebalancing to adapt to changes in the market and political landscape.

How to Get Started with the DC-Insider Portfolio

To invest in the DC-Insider SmartPortfolio, all you need to do is open an eToro account and fund it with a minimum investment of $500. This gives you access to the performance of companies with significant political influence while ensuring that your portfolio mirrors the sector exposure of the S&P 500. The monthly rebalancing ensures that your portfolio stays aligned with the latest political and market conditions, helping you invest confidently over the long term.

The DC-Insider SmartPortfolio on eToro offers investors an innovative approach to building a diversified portfolio by tracking companies with significant political influence. By leveraging lobbying data, government contracts, and congressional stock trading, the portfolio seeks to identify companies that stand to benefit from political decisions. With monthly rebalancing and a long-term focus, it is a suitable option for those looking to invest in companies with a strong presence in both the market and political arenas.

📈 Join Us

If you’re ready to start your trading journey or refine your skills, NexxtGen Markets is here to help. Join Steve and the community to access high-quality insights, proven strategies, and ongoing mentorship that can make a difference in your trading success. https://bit.ly/nexxtgenmarkets

⚠️ Risk Warning

Trading and investing carry risks. You should seek professional advice before engaging in such activities. Leverage can amplify both gains and losses. Past performance is not indicative of future results. Full risk disclosure: http://nexxtgen.pro/risk

🧾 NexxtGen Markets partner with eToro and may receive a small commission for anyone joining eToro via our website or socials.