A new fund is betting these 120 companies are trade-war proof

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A small new exchange-traded fund launched today with an eye-catching concept: It plans to invest in companies that have large numbers of government contracts, which it thinks will protect them from the trade wars launched by US president Donald Trump.

MCAM International, a small outfit based in Charlottesville, Virginia, has chosen the ticker symbol “TWAR” for its fund. It targets multinationals that have close relationships with states around the world—often benefitting from what it calls “government patronage”—and strong records on innovation and intellectual property.

They are bucking the now received wisdom that technology transfer is a threat to companies by looking at firms that have shared their intellectual property as part of contracts with governments, CEO David Martin told Quartz. He argues that selling intellectual property to a government actually spurs more work and information-sharing with that state, and incentivizes the states to favor those firms.

“[Governments] typically do not subject those types of technologies to the same penalties that they’ve put on other products and services that are subject to tariffs and other trade sanctions,” Martin said. “They are less likely to allow adverse trade policies to harm that particular company.”

Analysts greeted the fund with some skepticism. Many of the companies in the fund are the kind of massive multinationals you’d expect to be safe investments, such as GE, Amazon, and Microsoft.

The fund’s top five holdings have earned a combined total of approximately $100 billion in US federal contracts since 2008.

But even big contractors aren’t always safe. “There are some very large federal contractors that are included, as well as other companies that have a strong foothold in the energy, pharmaceutical, IT, and consumer product sectors,” said Scott Amey, general counsel at the Project On Government Oversight, a nonprofit that acts as a watchdog on federal spending. “The government contractors might be the most protected, but even they might take a hit if a prolonged trade war takes place.”

Here are the companies listed in the fund, according to SEC filings:

Company name % of net assets
GENERAL ELECTRIC CO 2.22%
CISCO SYS INC 1.57%
ADVANCED MICRO DEVICES INC 1.37%
XEROX CORP 1.35%
INTERNATIONAL BUSINESS MACHS COM 1.34%
EDWARDS LIFESCIENCES CORP 1.23%
OMRON CORP 1.13%
HITACHI 1.09%
TARGET CORP 1.08%
TOKYO ELECTRON 1.08%
MASTERCARD INC 1.07%
APPLIED MATLS INC 1.06%
QUALCOMM INC 1.04%
DOVER CORP 1.02%
MICRON TECHNOLOGY INC 1.02%
PROGRESSIVE CORP OHIO 0.99%
Cash & Other 0.96%
AMAZON COM INC 0.95%
EBAY INC 0.94%
JPMORGAN CHASE & CO. 0.94%
COCA COLA CO 0.93%
HONEYWELL INTL INC 0.92%
LILLY ELI & CO 0.92%
PEPSICO INC 0.91%
MEDTRONIC PLC 0.91%
ADIDAS AG 0.91%
MICROSOFT CORP 0.91%
LAM RESEARCH CORP 0.90%
HARRIS CORP DEL 0.90%
VISA INC 0.90%
TEXAS INSTRS INC 0.90%
BRIDGESTONE CORP 0.89%
ADOBE INC 0.88%
HP INC 0.88%
NORTHROP GRUMMAN CORP 0.88%
AT&T INC 0.88%
LOCKHEED MARTIN CORP 0.88%
PROCTER AND GAMBLE CO 0.87%
CCL INDUSTRIES INC – CL B 0.86%
PFIZER INC 0.86%
MERCK & CO INC 0.84%
AVERY DENNISON CORP 0.84%
ABBOTT LABS 0.84%
DAIMLER AG 0.84%
EXPERIAN 0.84%
NEC CORP 0.84%
GENERAL MTRS CO 0.83%
SEALED AIR CORP NEW 0.83%
SEAGATE TECHNOLOGY PLC 0.83%
JOHNSON & JOHNSON 0.83%
CHEVRON CORP NEW 0.83%
INTL PAPER CO 0.82%
OWENS CORNING NEW 0.82%
KERING 0.82%
BAXTER INTL INC 0.82%
MITSUBISHI MATERLS 0.82%
LINCOLN NATL CORP IND 0.82%
DANA INC 0.81%
AKAMAI TECHNOLOGIES INC 0.80%
DEERE & CO 0.80%
BLACKBERRY LTD 0.80%
CATERPILLAR INC DEL 0.79%
KIMBERLY CLARK CORP 0.79%
DEXCOM INC 0.79%
SMITH & NEPHEW 0.79%
BOEING CO 0.78%
ALLSTATE CORP 0.78%
BOSTON SCIENTIFIC CORP 0.77%
UNILEVER NV 0.77%
BAKER HUGHES A GE CO 0.77%
BAUSCH HEALTH COS INC 0.77%
ILLINOIS TOOL WKS INC 0.76%
CONOCOPHILLIPS 0.76%
WESTERN DIGITAL CORP 0.75%
TOSHIBA CORP 0.75%
SANDVIK AB 0.75%
TECHTRONIC INDUSTR 0.75%
STANLEY BLACK & DECKER INC 0.74%
FISERV INC 0.74%
SONY CORP 0.74%
BAYER AG 0.73%
ORACLE CORP 0.73%
KONINKLIJKE PHILIP 0.73%
BRISTOL MYERS SQUIBB CO 0.73%
KONAMI HOLDINGS CO 0.73%
INTEL CORP 0.73%
YAMAHA CORP 0.73%
TEXTRON INC 0.72%
BP 0.72%
VERIZON COMMUNICATIONS INC 0.71%
ROLLS ROYCE HLDGS 0.71%
ANGLO AMERICAN 0.70%
PACKAGING CORP AMER 0.70%
THALES 0.70%
MITSUBISHI ELEC CP 0.70%
SEIKO EPSON CORP 0.70%
KOMATSU 0.69%
NOVO NORDISK A/S 0.69%
TREND MICRO INC 0.69%
PANASONIC CORP 0.68%
3M CO 0.68%
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