The United States of America is the birthplace of many of the innovations that have shaped humanity as we know it today. From the institution of a system that is by and for the people to the formation of modern financial markets and the scientific discovery of novel crop phenotypes, life-saving medicines, and other inventions that have benefitted Americans and global citizens alike, America has a reputation for being at the forefront of change and growth globally. America is more than just an incubator of innovation, however: it is an economic powerhouse.
Even though the citizens of the U.S. make up less than 5% of the global population, they generate and earn more than 20% of total global income.[1] Ranked #1 in nominal GDP,[2] America’s economy is dominant in both size and agility, where agility is characterized by adaptability, dynamism, modernity, and responsiveness. Exemplifying this notion of agility, the U.S. economy rebounded to pre-pandemic levels more quickly than its G7 peers and the Eurozone composite in the aftermath of the COVID-19 pandemic.
In Q1 2022, U.S. real GDP was only 1.8% below 2015–2019 trend levels, whereas remaining G7 countries were approximately 4–6% below trend and the Eurozone composite was about 4.5% below trend. The speed of its economic recovery led the U.S. to shrink its budget deficit to below pre-pandemic levels and it was the only G7 constituent to accomplish this as of Q1 2022.[3] To boot, throughout the markedly volatile and uncertain period driven by the pandemic, the global investment community maintained its confidence in the U.S. economy where the U.S. saw the greatest inflow[4] of foreign direct investment in 2020 and 2021.
When considering the unrivaled resilience, innovation, and influence of the U.S. economy, allocators and individuals have good reason to achieve and maintain exposure to it. Many investors look to well-known national indices like the S&P 500 to provide them with broad U.S. market equity exposure. We estimate, however, that only 61.5% of S&P 500 revenues are actually generated in the U.S. as of December 31, 2022[5] — a far cry from being a pure play investment in the United States.
Beyond the strictly economic incentives of investing in the United States, as a citizen or resident of this country, investing and spending your capital domestically will indirectly benefit you through the phenomenon of compounding. By helping businesses and services around you grow, you ultimately help generate more tax revenue to support social services spending and increase the wellbeing of your countrymen, which in turn, should lead to higher levels of charitable giving, too.
With this potential impact in mind, those interested in investing in the U.S. have an opportunity to get nearly 100% exposure through the RiverNorth Patriot ETF (BATS: FLDZ). And while investing in broad indices might produce a tangential impact, investing in FLDZ will provide direct support to the Folds of Honor, a 501(c)(3) non-profit focused on providing education and scholarships to families of veterans and first responders who were disabled or killed in action. Per the Fund’s prospectus, we must donate a majority of the sub-advisory fee or 100% of the profit derived from the management of the Fund, whichever is greater, to the Folds of Honor Foundation. By supporting those who have served our nation, we can show gratitude for their sacrifices and provide opportunities for them to achieve their goals in life in a measurable way.
[1] https://ustr.gov/issue-areas/economy-trade
[2] FactSet Research Systems. Data accessed February 23, 2023.
[3] https://home.treasury.gov/news/featured-stories/the-us-economic-recovery-in-international-context
[4] https://unctad.org/system/files/official-document/wir2022_en.pdf
[5] RiverNorth Capital Management & FactSet Research Systems. Data accessed January 16, 2023.
