It turns out that despite a passion for real estate, Donald Trump likes to invest in the stock market as well.
We know this because every year, it is a requirement that the President of the United States discloses their financial position in the Executive Branch Personnel Public Financial Disclosure Report.
This process is overseen by the United States Office of Government Ethics and is done in order to prevent conflicts of interest in the executive branch.
Delving into the report provides several remarkable insights about the President’s dealings, including the fact that he is the President, Director or Chairman of 565 different companies!
While he has some investments, the bulk of his wealth is tied into exactly what you would expect – namely hotels, brands, and golf courses.
Being a real estate specialist, it looks like Donald Trump has left the management of his stock market investments to the experts at J.P. Morgan, with the holdings placed in different trusts.
Delving into the detail, it turns out that the bulk of Donald Trump’s investments are held in ETFs, with virtually no direct ownership of specific stocks.
This is unsurprising since in 2016 he came out in public saying he was selling his stocks, likely to prevent any perceived or actual conflicts of interests should he become President.
One of Trump’s largest holdings is the SPDR S&P 500 ETF, which tracks the performance of the 500 largest U.S. firms.
He also appears to be a fan of geographical diversification, with funds that track many of the developed markets around the world such as the U.K. and Japan.
Surprisingly, some of the ETFs and Managed Funds he holds have relatively high fees compared to peers.
For example, the SPDR S&P 500 holdings cost 0.09% a year, but you can find equivalents with Vanguard and iShares for only 0.04%.
On the Managed Fund front, he holds the J.P. Morgan U.S. Large Cap Core Plus Fund, which has very high fees of approximately 0.8% per year despite a very poor performance over the past five years where it has consistently lagged its index.
Similar high fee funds with poor performance include the Dox and Cox International Stock Fund and the Neuberger Berman Multi-Cap Opportunity Fund.
Given research has shown that time and time again, managed funds tend to underperform the general market, coupled with the very high fees, they’re surprising choice that are costing Trump some serious returns.
How The Portfolio Is Performing
Analyzing the entire portfolio shows that it is performing no better than the S&P 500 during this year’s COVID-19 induced financial crash.
The financial disclosure data dates back to May 2019 and when reviewed, his portfolio of ETFs and mutual funds have performed only slightly better than the S&P 500.
Where the S&P 500 is down 16%, Trump’s investments are down 15%.
One difficulty with analyzing Trump’s portfolio performance is that the financial disclosure data provides ranges only and not exact positions.
Coupled with the data being as far back as May, this means that it doesn’t consider whether he may have sold or bought any stocks in the lead up to the COVID crisis.
If we assume he hasn’t bought or sold any stocks since May, it means that he ended May with a portfolio between $595k and $2.4m across his three investment trusts.
If we then factor the performance of the market since May, it means Donald Trump has made a loss of somewhere between $95k and $360k.
Of course, as President, it’s a much more delicate matter for him to buy and sell stocks given his access to sensitive information.
A few senators have already faced significant public backlash when they sold shares following a confidential security briefing that occurred a couple of weeks before the pandemic struck.
Even so, the President is unlikely worried at all about the losses.
Even at the max loss of $360k, it barely even dents the $47 million he holds in cash, let alone the millions he has in real estate holdings.
While Trump is very skilled at buying and selling property, it’s clear from his portfolio performance that his skills don’t extend to buying and selling shares.
The fact that his portfolio is down and the S&P 500 fell 16 percent after he wrote on Twitter “Stock Market starting to look very good to me”, says it all really.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
