Trump Media is looking to sell investment funds, raising ethics questions
The Trump brand has been used to hawk cryptocurrencies, Bibles, steaks and guitars. Now the US president's media company is laying the groundwork to sell investment funds.
Trump Media & Technology Group Corp., which is majority owned by Donald Trump, plans to sell offerings tied to his agenda.
The parent of the Truth Social platform, where the president is also a prominent poster, has announced plans for and trademarked the names of a group of financial products under the Truth.Fi banner—investments that will potentially benefit from the president's policies with bets on energy, crypto and domestic manufacturing. The proposed products include exchange-traded funds, or portfolios that trade like stocks that can be purchased through most brokers.
Details on the products' structures and strategies are still scarce. ETFs are subject to approval by regulators, and no public filings are available yet. Yet the brand-building has already begun. So have the arguments. Critics see a sitting US president having a financial stake in the success of funds that are associated with his brand and his politics, built on strategies that he can influence from the White House.
'These transactions fly in the face of government ethics standards,' says Michael Posner, professor of ethics and finance at NYU Stern School of Business. 'When you're president, the assumption is that 100% of your energy is devoted to serving the country—not monetizing your public platform.'
The administration says the president is walled off. 'President Trump's assets are in a trust managed by his children,' Deputy Press Secretary Anna Kelly said in a statement. 'There are no conflicts of interest.' Trump Media did not respond to a request for comment.
US presidents aren't required under federal law to divest assets, but past leaders have done so or used blind trusts to avoid perceived conflicts. Trump, however, has maintained financial exposure through family-controlled structures. Right before taking office again, he transferred about $4 billion worth of Trump Media shares to a trust controlled by his son Donald Trump Jr. But the arrangement is not a blind trust with independent oversight.
The concern among ethics experts isn't only the ownership. It's the overlap between policy and potential monetary benefit. The Truth.Fi funds could rise and fall in line with decisions the president makes in office. Protectionist policies aimed at various sectors and countries could help the proposed Truth.Fi Made in America ETF, which is set to bet on reshoring. Deregulatory moves in favor of crypto may boost a Bitcoin-themed ETF. And so on.
The crypto angle is a familiar one. Trump and his family have already profited from the digital-asset boom, hyping up a cryptocurrency bearing his name. Such so-called memecoins have no underlying value as investments, but creators of Trump's coin recently held a promotion offering top holders a private dinner with the president. A company affiliated with the Trump Organization owns a large chunk of the Trump memecoins. Another Trump family-linked company, World Liberty Financial, has also issued its own cryptocurrencies, including a dollar-linked digital token called a stablecoin. World Liberty recently announced the coin would be used to complete a $2 billion transaction between a state-backed Abu Dhabi company and the overseas crypto exchange Binance. Senators Elizabeth Warren of Massachusetts and Jeff Merkley of Oregon have said the stablecoin offers 'opportunities for unprecedented corruption' because the Trump family can benefit financially from the use of its product.
In its ETF announcement, Trump Media said the proposed products, which include portfolios known as separately managed accounts in addition to ETFs, offer a conservative alternative to 'woke' investing. It's a niche currently occupied by funds including the Point Bridge America First ETF and the God Bless America ETF, among others. Both have gathered only modest assets, as have left-leaning ETFs, thanks in part to a saturated ETF market that's making life harder for newbie issuers.
There are already about 60 ETFs based on Bitcoin, a tally that's grown by at least 22 this year. In addition, there are more than 60 funds tied to energy, including coal, and at least three from issuers including Tema and BlackRock Inc.'s iShares based on reshoring and manufacturing, according to data compiled by Bloomberg.
Trump Media 'will be depending on its brand recognition to set its ETFs apart among a crowd of competing products,' says Roxanna Islam, head of sector and industry research at ETF shop TMX VettaFi. 'A strong political following may help gather initial support, but in the long run, flows will ultimately depend on ETF basics like fees and performance.'
The company has announced plans to seed the funds with as much as $250 million. It's working with trading platform Crypto.com and investment firm Yorkville Advisors to help run the funds. Still, its biggest unrivaled asset is Trump himself. Even if he's not an explicit spokesperson, almost everything he does makes him a potential ad for the company. 'What a competing fund doesn't have is a person who's in the news literally every day who can then talk about these things,' says Philip Nichols, a professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania.
Hal Lambert, who runs the MAGA ETF and has raised money for Trump's presidential runs, dismisses concerns about conflicts. For one, the president's views on issues such as domestic manufacturing have been publicly known for decades. There are more direct ways to have a seat at the table than buying an ETF, he says; people can give money to campaigns or political action committees, for instance. 'I just don't know that that stuff would work on him,' Lambert says. 'Trump does what he wants to do.'
Hajric writes for Bloomberg
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