Roundhill Investments is poised to introduce the first US exchange-traded funds tied to prediction markets, with the launch of six funds that track the potential control of the White House, Senate, and House by Democrats or Republicans. According to a filing with the US Securities and Exchange Commission, the funds will be listed on May 5, as reported by Bloomberg ETF analyst James Seyffart.
The funds include the Roundhill Democratic President ETF, Republican President ETF, Democratic Senate ETF, Republican Senate ETF, Democratic House ETF, and Republican House ETF, which will provide exposure to the outcomes of the US elections through swap agreements referencing binary event contracts traded on CFTC-regulated markets. The prospectus highlights that the funds' value will substantially decrease if the targeted party does not win, and warns that if the market's prediction is later proved incorrect, shareholders will have no recourse.
The introduction of these ETFs could expand access to election trading by allowing them to be held in ordinary brokerage accounts and certain retirement accounts, and comes after the CFTC withdrew a proposal that would have banned political event contracts. Other asset managers, such as Bitwise and GraniteShares, have also filed to list similar ETFs, with varying structures and approaches to the prediction market.
Additionally, Roundhill has filed to list non-political prediction market ETFs tied to the possibility of a US recession, further diversifying the range of prediction market ETFs available to investors.