Roundhill Investments is poised to introduce the first US-based exchange-traded funds tied to prediction markets, with the launch of six funds scheduled for May 5, as reported by Bloomberg ETF analyst James Seyffart. These funds will be listed based on the predicted control of the White House, Senate, and House by either Democrats or Republicans. The funds in question are the Roundhill Democratic President ETF (BLUP), Republican President ETF (REDP), Democratic Senate ETF (BLUS), Republican Senate ETF (REDS), Democratic House ETF (BLUH), and Republican House ETF (REDH).
The House and Senate products are linked to the outcome of the November 3, 2026 elections, while the presidential products are focused on the November 7, 2028 election. The funds achieve exposure through swap agreements tied to binary event contracts traded on CFTC-regulated markets, which settle at $1 if the predicted outcome occurs and $0 if it does not.
A warning in the prospectus cautions that if the targeted party fails to win, the fund will lose nearly all its value. Roundhill has decided against terminating the funds post-settlement; instead, once the market prices a winner above $0.995 or below $0.005 for five consecutive trading days, the fund will treat the outcome as decided and transition into the next cycle. The prospectus also notes that if the market is later proven incorrect, there will be no recourse for shareholders.
Other asset managers, such as Bitwise and GraniteShares, have filed similar products, with structures differing in terms of fund termination and transition. The introduction of these ETFs could expand access to prediction markets by allowing them to be held in standard brokerage accounts and certain retirement accounts, following the CFTC's withdrawal of a proposal that would have banned political event contracts. Additionally, Roundhill has filed to list non-political prediction market ETFs tied to the likelihood of the US entering a recession.