Betting on Insiders

Signal or noise?

December 2025. Reading Time: 10 Minutes. Author: Nicolas Rabener.

SUMMARY

  • Following insider trading is an intuitively appealing investment strategy
  • However, the track record of such funds is abysmal
  • CEOs are as poor at predicting the future as investors

INTRODUCTION

Nancy Pelosi is known for her 38-year-long service to U.S. citizens as a Democratic member of the U.S. Congress, as well as the significant amount of wealth she accumulated during that period. Her official salary as a member of Congress is approximately USD 200,000 per year, yet her joint net worth with her husband amounts to hundreds of millions of dollars.

Insider trading is illegal in the U.S., and Nancy Pelosi does not have access to insider information from publicly listed companies, so perhaps she is simply a gifted investor. Investors who want to benefit from her disclosed trades can buy the Unusual Whales Subversive Democratic Trading ETF (NANC), which tracks stocks bought or sold by Democratic members of Congress and their families. Those who also want to benefit from trades by Republicans can invest in the Unusual Whales Subversive Republican Trading ETF (GOP).

In this research article, we will review the performance of funds that track insider trading.

BREAKDOWN BY SECTORS

We focus on five U.S. mutual funds and ETFs that track insider trading: the Catalyst Insider Buying Fund (INSAX), AdvisorShares Insider Advantage ETF (SURE), Unusual Whales Subversive Republican Trading ETF (GOP), Unusual Whales Subversive Democratic Trading ETF (NANC), and Davenport Insider Buying Fund (DBUYX). These funds charge fees ranging from 0.75% to 1.53% and collectively manage nearly $500 million in assets. The number of holdings in each fund varies from 38 to 143 stocks.

First, we examine the sector over- and underweights relative to the Russell 1000 Index, which we use as the benchmark for these funds. The analysis reveals notable deviations from the benchmark, highlighting the distinct composition of each portfolio. Four funds show significant underweights in the technology sector, three have overweights in industrials, and one fund, INSAX, carries an overweight in financials.