One year ago, on June 18, 2025, the Free Markets ETF (FMKT) launched with a distinct mandate: to invest in companies positioned to benefit from deregulation and free-market dynamics during the second term of the Trump presidency. As of June 18, 2026, Michael Gayed, Portfolio Manager for Tactical Rotation Management and a sub-adviser to FMKT, discussed the fund’s insights and performance, highlighting deregulation as a significant investable theme.
Gayed explained that the initial concept for FMKT emerged from discussions within his network of over 350 advisors. The core insight was that deregulation could accelerate time to market, enhance margins, boost earnings fundamentally, and foster increased competition. This thesis aligns with the new administration’s aggressive stance, transitioning from a policy of cutting two regulations for every new one to an even more ambitious goal of cutting ten. Gayed noted, “Trump is making it very clear that he’s going to go from ‘for every new regulation you want, I want two cut’—it goes from that to ‘for every new regulation, I want 10 cut.’”
The Deregulation Investment Thesis
The belief that deregulation acts as a powerful tailwind for broader markets is central to FMKT’s strategy. Gayed drew a comparison between the U.S. and European economies, stating, “if you look at why the US has outperformed Europe so much—it’s not just because of tech, it’s because we don’t have as much regulation as Europe does.” He emphasized that regulation acts as a “stopping point, a friction that hurts earnings and time to market.” Consequently, industries experiencing a reduction in regulatory burdens are theoretically poised for outperformance.
The fund’s active management approach is crucial, given the dynamic nature of executive orders and regulatory shifts. Gayed explained that the team must quickly identify which sectors and industries benefit most from deregulation. This involves a sophisticated process:
- **AI Screening:** A proprietary AI workflow screens for sectors, industries, and individual companies frequently mentioning deregulation in earnings transcripts.
- **Multiple Filters:** The AI process incorporates filters for valuation and the impact of regulatory costs on SG&A (Selling, General, and Administrative expenses).
- **Executive Order Analysis:** The fund actively monitors executive orders to determine their implications for specific companies.
This granular approach allows FMKT to pinpoint beneficiaries, even as the regulatory landscape evolves rapidly.
Target Sectors and Key Holdings
FMKT focuses on sectors that historically face significant regulatory oversight and are therefore likely to see substantial benefits from deregulation. These include industrials, financials, cannabis, nuclear energy, and aerospace. Notably, the fund largely avoids the technology sector, particularly AI, due to the expectation that it will face increased regulation rather than less. Gayed stated, “We believe that tech is probably going to be regulated, and maybe AI in particular will be regulated.”
Specific examples of holdings illustrate the fund’s strategy:
- **Financials:** “Banks, sure,” Gayed noted, citing the potential rollback of regulations like Dodd-Frank and Basel accords. Robinhood is highlighted as a company at the “forefront of financial deregulation,” particularly with its significant presence in the crypto space.
- **Cannabis:** With recent reclassification efforts, companies like Tilray are included in the portfolio.
- **Nuclear Energy:** The growing demand for energy, driven by AI build-out, necessitates faster time to market for nuclear plants, making it a key deregulatory focus.
The fund’s mandate stipulates that at least 80% of its assets must be invested in companies expected to benefit from regulatory shifts. The remaining 20% offers some flexibility, with up to 5% of the portfolio permitted in Bitcoin and Ethereum, as well as gold. Gayed justified this, stating, “if you’re talking about what a free market is—which is unencumbered by regulation—those are, almost by definition, a free marketplace.”
Performance Trajectory and Future Outlook
Since its launch, FMKT has experienced a dynamic performance trajectory. Gayed reported strong initial performance, with the fund at one point outperforming the S&P by “a thousand basis points.” However, this strong start led to performance chasing, and a subsequent drawdown occurred as market sentiment shifted back to “AI is the only play in town.” Currently, the fund is described as “meandering.”
Despite recent fluctuations, Gayed remains confident in the long-term viability of the deregulation theme. He believes it is “here to stay,” asserting that “even if you get a Democrat as president next go-round, the reality is, industries that have less regulation should at least theoretically outperform.” Furthermore, he noted the inherent difficulty in reversing regulatory rollbacks: “It’s hard, once you deregulate something, to re-regulate it—at least that quickly,” unless a crisis intervenes.
The Free Markets ETF represents a targeted investment vehicle designed to capitalize on a persistent macroeconomic theme. While its initial performance saw significant highs and subsequent corrections, the underlying thesis of deregulation as a driver of corporate earnings and market efficiency remains a compelling factor for investors looking beyond traditional growth narratives.
