The U.S. Department of the Treasury announced the investment choices for the new Trump Accounts program, designating a single default fund at launch and selecting four further index exchange-traded funds to be offered in subsequent months.
All contributions initially will be invested in the State Street SPDR Portfolio S&P 500 ETF (NYSE:SPYM), an ETF that tracks the S&P 500 Index. The Treasury said it chose this vehicle to provide exposure to the U.S. equity market while keeping investment costs below the statutory fee cap.
In addition to the default SPYM option, the Treasury selected four other index ETFs to form the broader menu for the program. Those funds are the iShares Core S&P 500 ETF (NYSE:IVV), the Vanguard Total Stock Market ETF (NYSE:VTI), the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (NYSE:SPTM), and the iShares Core S&P total U.S. Stock Market ETF (NYSE:ITOT). The agency said these choices were intended to offer coverage across major segments of U.S. equity markets while maintaining low costs for investors.
At program launch the SPYM fund will operate as the default vehicle for all Trump Accounts. The Treasury indicated it plans to introduce functionality in the coming months that will allow parents or guardians to direct contributions across the additional investment options. Until that functionality is activated, every contribution will remain invested in the default S&P 500 ETF.
The Treasury also said it will notify account holders when the investment-election feature is live and will provide instructions for those who wish to change the allocation of funds once the capability is available.
Operational note: The initial configuration places all funds in a single low-cost S&P 500 ETF to ensure immediate market exposure while the Treasury completes work to enable participant-directed allocations across the selected index funds.
Readers should note: The Treasury will make a separate announcement when the option to elect alternative investment allocations is ready, and will supply account holders with the steps required to make such changes.