Investing in America’s Industrial Strategy
In a sign of how blurred the line between statecraft and markets has become, Wall Street is preparing to turn Washington’s investment strategy into a tradable asset.
Roundhill Financial Inc., known for its thematic and innovation-driven exchange-traded funds, has submitted paperwork for a new ETF that aims to replicate the US government’s capital allocation strategy — effectively letting investors buy into the same industries and companies where federal money is flowing.
If approved by the Securities and Exchange Commission (SEC), the proposed Roundhill USA Government Portfolio ETF (ticker: USAG) would track industries benefiting from the Biden–Trump-era industrial policy — a new economic framework that has seen Washington taking direct equity stakes, influencing corporate decisions, and linking public funding to domestic production goals.
It’s a bold concept — and one that could redefine how retail investors engage with government-led capitalism.
“This ETF demonstrates an attempt to monetize the 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.”
From Policy to Portfolio: The Rise of “American State Capitalism”
The USAG ETF proposal reflects a larger structural shift in how the federal government interacts with markets. What began as targeted interventions to fix supply chain vulnerabilities during the pandemic and counter China’s dominance in key sectors has evolved into a strategic industrial doctrine.
Under this approach, Washington isn’t just regulating or subsidizing industries — it’s buying into them. Through programs under the Inflation Reduction Act, CHIPS and Science Act, and Defense Production Act, the federal government has deployed billions into semiconductors, green energy, mining, and defense technologies.
According to Treasury Secretary Scott Bessent, the goal is to reduce dependence on China and strengthen national economic resilience by directly investing in critical supply chains — from battery materials and rare earths to semiconductor fabrication and defense manufacturing.
Inside the Fund: What the US Government ETF Would Track
The Roundhill USAG ETF aims to mirror sectors and companies receiving direct or indirect US government investments. Based on public disclosures, the fund could theoretically include holdings such as:
- Intel Corp. (INTC) – the US government owns roughly 10% as part of the domestic chip initiative.
- Trilogy Metals Inc. – a 10% stake held through strategic materials programs.
- MP Materials Corp. – a $400 million government position in rare earth extraction.
- Lithium Americas Corp. – about 5% owned via energy security funds.
- United States Steel Corp. (X) – where Washington reportedly holds a “golden share” under national security provisions.
These positions highlight how the White House’s industrial strategy now intersects with capital markets, blurring the lines between fiscal policy and portfolio management.
If approved, the ETF would package this strategy into a transparent, investable product for retail and institutional investors alike — a novel attempt to transform federal capital allocation into a market theme.
Turning Policy Into Profit: The Politics of Investing Alongside the State
For some on Wall Street, the idea of a US government ETF signals a new chapter in thematic investing — one that doesn’t just chase technological innovation or social causes, but political will itself.
By following the flow of federal investment, the fund could give investors a chance to ride the same tailwinds as defense contractors, chipmakers, or renewable energy firms benefiting from federal dollars.
Supporters argue this approach is both financially sound and strategically aligned.
“Production for security is going to be a driving force for government, corporate, and asset manager policy,” said Peter Tchir, head of macro strategy at Academy Securities. “It’s the new ESG — owning what the government is buying makes sense on multiple levels.”
Tchir has even begun developing indexes built on similar logic, designed to capture the “security premium” attached to companies critical to national resilience.
“As a massive consumer, the government can direct spending to these firms,” he added. “Whether as a signal or through direct contracts, the companies benefiting from state capital should outperform.”
Skepticism Remains: “Duck Food for the Ducks”
Not everyone is convinced that mimicking Washington’s playbook will translate into alpha.
Critics caution that government investments are often disclosed only after the fact, meaning any ETF trying to track them might end up buying after the market has already priced in the gains.
“It’s an interesting idea, but it sounds like just another flavor-of-the-month ETF,” said Jack Ciesielski, founder of R.G. Associates. “More duck food for the ducks.”
Others warn that government-led investing can distort markets, crowd out private capital, and politicize asset allocation, creating inefficiencies or moral hazards over time.
For example, strategic stakes in sectors like defense, energy, or critical minerals might benefit national goals but could perform poorly if global demand shifts or policy priorities change.
Moreover, industrial policy ETFs carry an inherent risk: the next administration could dramatically alter funding directions, leaving investors exposed to shifting political winds rather than long-term fundamentals.
Wall Street’s Latest Trend: Thematic ETFs Meet Political Strategy
Despite the skepticism, the proposal fits squarely within a broader boom in thematic investing, where asset managers design funds around macro narratives — from clean energy and cybersecurity to space exploration and AI.
But this time, the narrative isn’t corporate innovation or cultural change — it’s state capitalism.
The Roundhill USAG ETF effectively turns American industrial policy into an investable story. Whether it performs well will depend less on earnings reports and more on Washington’s capital deployment, subsidy frameworks, and national priorities.
If successful, the fund could mark the mainstream arrival of “policy-based investing” — where political trends drive portfolio construction just as much as economic cycles.
The Bigger Picture: “Production for Security” and the Future of Market Capitalism
The emergence of a US government-tracking ETF underscores how deeply intertwined national security and economic policy have become.
After decades of globalization, the U.S. is returning to an industrial footing where domestic production, supply chain control, and technological independence matter more than cost efficiency.
This “production for security” model, as Tchir calls it, may become the defining investment theme of the 2020s — a successor to ESG in both influence and capital flows.
Companies that align with this trend — from AI chipmakers and renewable infrastructure firms to battery suppliers and defense contractors — are poised to benefit from multi-decade government support.
In this sense, the Roundhill USAG ETF may not just be a gimmick, but an early reflection of how financial markets adapt to geopolitical reality.
Investing in the State — or Investing With It?
The proposed Roundhill USAG ETF encapsulates a historic shift in global markets: capital is becoming a tool of national strategy, not just private profit.
Whether the fund succeeds or flops, it highlights how the traditional boundaries between Wall Street and Washington are eroding. Investors are no longer simply betting on corporate innovation — they’re tracking the movements of governments themselves.
For those who believe the U.S. industrial resurgence will define the next decade, following America’s own capital flows could make sense. For others, it’s a cautionary tale about the politicization of investing.
Either way, the USAG ETF proposal marks a new era in market thinking — one where “buy American” may soon mean buying what America itself owns.