Episode summary
Which ETF Won Big With Trump Accounts? | Trillions
Trillions
· · 20 min · Hosts: Joel Weber, Eric Balchunas
Summary
Trump Accounts are designed to seed children with $1,000 at birth, lock the money up until age 18, and let families or employers contribute up to $5,000 a year. The hosts argue the policy could move a large share of Americans who do not currently own stocks into the market, with Bloomberg Intelligence estimating roughly 12 billion a year initially and as many as 28% of non-stock owners eventually participating. They also emphasize that the program is as much a wealth-gap policy as an investing policy, because even the initial grant can compound meaningfully over time.
The biggest ETF winner, they say, is State Street’s SPDR Portfolio S&P 500 ETF, SPYM. The Treasury designated SPYM as the default option, apparently because its 0.02% fee undercuts similar large-cap funds. That could funnel a huge share of the Trump-account money into a relatively obscure fund, even though it started life as a little-noticed low-cost product and only took off after State Street switched it to the S&P 500 and cut fees.
The hosts argue the broader effect could be bigger than one fund. If a much larger share of Americans ends up owning stocks, the market could become politically harder to let fall sharply, especially if wealthy donors also use the accounts as a philanthropy vehicle. That leads to their most provocative claim: the policy could make the U.S. stock market feel “too big to fail.”
Key takeaways
- Bloomberg Intelligence thinks Trump Accounts could channel about 12 billion a year into markets at the start, with participation eventually reaching 28% of Americans who currently do not own stocks.
- SPYM became the default Trump-account ETF because its 0.02% fee is lower than comparable S&P 500 funds, giving State Street a potentially massive flow advantage.
- The hosts argue Trump Accounts could narrow the wealth gap by turning asset ownership into a near-universal policy feature rather than a privilege for existing stockholders.
- State Street’s SPYM was once an obscure low-cost fund, but switching it to the S&P 500 and cutting fees helped it gather $150 billion and a much larger profile.
- The hosts warn that if enough voters have money in equities, the stock market could become politically protected in a way that makes it “too big to fail.”
Notable quotes
“It gives you $1,000 at birth and then you can't touch it till you're 18”
“SPYM is the ETF is the name of it is State Street Spider Portfolio S&P 500 ETF”
“I think that's why the treasury picked it I don't think it was political”
“Now there are four no five other ETFs that you can use if you like switch IVVTI”
“So we may be like in a brave new world with the stock market being like socialized”
How the episode opens
Bloomberg Audio Studios podcasts, radio, news. Welcome to Australians. I'm Joel Weber. — And I'm Eric Valunis. We're on the other side of July 4th, which means a America is 250 years old and also there's a new investment account for Americans.
Yes. So, — Specifically little Americans.
Yeah. This is the unveiling of what are is being called Trump accounts. Uh we've been on this for about a year.
You know, we read the legislation. We did some notes on what that might mean. And essentially a little backstory here is that there's a big problem in the US where half the people own stocks and the other half doesn't.
And the ones that do tend to be way richer and so there's a wealth gap. So how do you close that? Well, one idea is to get everybody invested who doesn't own stocks.
And that's what this does. It gives you $1,000 at birth and then you can't touch it till you're 18. And along the way,
That thousand dollars is free by way.
Yeah. it just put right into your account and you can have uh your company or your family donate up to 5,000 a year and you also might see philanthropists donate to the program. Michael Dell did this.
So there's a lot of potential here in my opinion and what it does is it's going to get uh we think at least 28% of Americans who aren't in stocks into stocks. So we're talking about a country that will maybe have the vast majority of people in the stock market. And so this is a new thing we think about.
12 billion a year will be put into the market via these Trump accounts to start. Over time that number will grow because the people will have them will contribute and there'll be new people.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- trump accounts
- etfs
- s&p 500 ownership
- low fee index funds
- state street spdr rivalry
Companies and tickers mentioned
- SPYM
- SPY
- State Street SPDR Portfolio S&P 500 ETF
- SPDR S&P 500 ETF Trust
- State Street Corporation
Watch the episode
Watch “Which ETF Won Big With Trump Accounts? | Trillions” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Trillions
-
Quit Your Job, Live Off an ETF? | Trillions -
Godzilla vs. King Kong, Degen Dip-Buyers and Anthropic | Trillions -
The ETF Graveyard: This Has Been a Record Year for Closures | Trillions -
New ETFs to Watch: A $2.5 Billion Launch, Anthropic and S&P 10,000, Anyone? | Trillions -
Wall Street’s Plan to Make Sports an Investable Asset | Trillions -
Can Corgi Become the Walmart of ETFs? | Trillions
Trillions, this episode and its artwork belong to Bloomberg. Octagon is not affiliated with the show; this page is an independent summary.
