Catenaa, Saturday, July 25, 2026- The Trump Trade Index has slumped about 16% since May after clobbering the S&P 500 Index at the beginning of the year.
Trump Trade Index by Ned Davis Research consists of a dozen exchange-traded funds expected to benefit from White House policies on homebuilding, defense spending, and the re-shoring of manufacturing.
The breakdown in the Trump Trade is mostly a result of the US conflict with Iran, which has pushed up energy prices, inflation expectations, interest rates and the value of the US dollar, Ned Davis Research wrote in a report this week.
“All this is tied to the Iran war and inflation,” said Pat Tschosik, Chief Thematic Strategist at Ned Davis Research. “Let’s just go three months without some sort of inflation shock, right? Between some sort of tariff, or war, or supply chain disruption, could we just go three months without some sort of supply shock?”
The slide comes after many Trump Trade bets posted double-digit percentage gains through the first three months of the year.
ETFs like the VanEck Rare Earth and Strategic Metals ETF, the Global X Uranium ETF and the Global X Defense Tech ETF were all up at least 20% at various points in the first quarter and held some of those gains in the second quarter before eventually flipping into the red.
Investors who bet on the success of Trump’s agenda faced several disappointments this year, according to Matt Gertken, Chief Geopolitical Strategist at BCA Research.
Those include the Iran war’s negative effects on the economy, like higher inflation that hampered manufacturing and housing investment, as well as the outperformance of AI-investing themes at the expense of specific stocks whose fates are tied to the economic cycle.
“Investors who bet on AI and against traditional cyclical sectors outperformed, while those who saw Trump as a champion of US manufacturing, heavy industry and working-class consumption suffered,” Gertken said.
Fund flows point to a steady stream of investors abandoning some of the trades. The Truth Social God Bless America ETF has seen consistent outflows every month since the war began.
Trading under the ticker YALL and offering outsized exposure to energy, industrials and financials, the fund has dropped more than 4% this year while the S&P 500 has climbed about 8%.
Notably, the fund does not own shares in the Truth Social owner Trump Media & Technology Group, which has repeatedly hit record lows this year, though it has rallied in July. The stock is still down 35% year to date.
Not all Trump-related ETFs are underwater. The Point Bridge America First ETF, which snagged the ticker MAGA, dropped less than the broad US stock market in March at the beginning of the Iran war and has remained higher for the year.
Another challenge is that investors are having an increasingly difficult time parsing the White House’s policy strategies and their eventual implementation.
Since Trump was sworn in, stock investors have been forced to follow a multitude of his social-media posts and executive orders and chase potential market winners and losers tied to them, only to see the president walk back plans or otherwise change tack.
