Want to mimic what stocks the US buys? There may be an ETF soon

Wall Street is riding this era of American state capitalism — tracking it, packaging it and offering it back to investors through a new ETF.

Roundhill Financial Inc. has submitted paperwork to launch an exchange-traded fund that would replicate the US government’s capital allocation strategy. The move comes as federal officials take an increasingly direct role in markets under Donald Trump’s industrial strategy: acquiring equity stakes in strategic sectors, tying conditions to public funding and asserting influence over corporate decisions.

If approved by the US Securities and Exchange Commission, which is currently affected by the shutdown, the Roundhill USA Government Portfolio ETF (proposed ticker: USAG) would track flows into industries that would reflect the US government’s investment strategy. Treasury Secretary Scott Bessent has said the White House is targeting, among other things, industries vital to national security to reduce America’s dependence on China.

What began as a tactical response to supply chain disruptions and competition with China is starting to look like the new norm. By following federal capital, the ETF turns a political worldview into an investable thesis.

This ETF “demonstrates an attempt to monetize this administration’s far more activist approach toward certain industries and companies,” said Steve Sosnick, chief strategist at Interactive Brokers. “It’s a fascinating sign of the times that a fund of this type might be launched.”

Among the government’s reported stakes: 10% in Trilogy Metals Inc., a $400 million position in MP Materials Corp., roughly 5% in Lithium Americas Corp., a “golden share” in United States Steel Corp. and 10% of Intel Corp.

The fund could be mistaken for another entry in the crowded world of thematic ETFs — where investing meets storytelling, and narrative often outruns performance. But its premise reflects something deeper: a shift in how markets now price political will.

“It’s an interesting idea, but it sounds like just another flavor-of-the-month ETF,” said Jack Ciesielski, an investor and accounting analyst at R.G. Associates, of the filing. “More duck food for the ducks.”

To be sure, government investments are typically disclosed after the fact — once speculation of a deal has already moved markets. That means any ETF attempting to mirror those positions may enter after the biggest gains have been made, limiting its potential for outperformance.

Critics warn that the government’s heavy-handed tactics risk distorting markets and shifting the balance of power between the state and the private sector. But some proponents argue it’s long overdue for Washington to play a stronger investment role in the economy. Count Peter Tchir of Academy Securities as a supporter.

“Production for Security is going to be a driving force for government, corporate and asset manager policy,” he said, calling the trend “the new ESG” — a theme he believes could soon shape markets just as sustainability once did. “Owning what the government is buying makes sense on multiple levels.”

Tchir is now developing indexes that go beyond just mirroring public holdings to capture a broader investment thesis.

“As a massive consumer, the government can direct its spending to these companies,” Tchir said. “Whether just as a signal or with encouragement from the government, companies we invested in should benefit.”