Roundhill Investments is poised to introduce the first US exchange-traded funds linked to prediction markets, with the launch of six funds that track the control of the White House, Senate, and House by Democrats or Republicans. According to SEC filings, these funds will be listed on May 5, as confirmed by Bloomberg ETF analyst James Seyffart. The funds in question are the Roundhill Democratic President ETF, Republican President ETF, Democratic Senate ETF, Republican Senate ETF, Democratic House ETF, and Republican House ETF.
The launch of these funds is set to provide exposure to election outcomes through swap agreements referencing binary event contracts traded on CFTC-regulated markets, which settle at $1 if the outcome occurs and $0 if it does not. The prospectus highlights the potential risks, noting that if the targeted party does not win, the fund will lose substantially all of its value.
The funds will not terminate after settlement and will instead roll into the next cycle once the market prices a winner at above $0.995 or below $0.005 for five consecutive trading days. Other asset managers, such as Bitwise and GraniteShares, have also filed to list similar products, with structures differing in terms of fund termination and rollover. The introduction of these ETFs could expand access to prediction markets, allowing them to be held in ordinary brokerage accounts and some retirement accounts, and comes after the CFTC withdrew a proposal to ban political event contracts.