Congressional Effect Fund
2008 -2013


For a number of years this was the website for the Congressional Effect Fund, a mutual fund run by Eric Singer.The Congressional Effect Fund (CEFFX) was a no-load fund with a low minimum initial investment, a higher than average annual fee, and surprisingly good performance. The Congressional Effect Management was based upon the premise of the Congressional Effect, which basically says: “The stock market preforms better when congress is not in session!”
SO the Congressional Effect Fund ( CEFFX invested in the S&P 500 on days when Congress is out of session and switched to domestic securities when it resumed.

Content is from the site's 2008 -2013 archived pages as well as other outside sources from 2011 - 2014.



Until now, government’s mostly deleterious effect on investment holdings has been largely ignored by investment advisors, to the peril of their clients. Data suggests that government’s impact goes much deeper than mere interest rate manipulation and Fed jawboning – items that garner the lion’s share of media attention.

We believe the effects of Congressional action and deliberation have a significant and predictably negative impact on investment performance.  We believe that Congressional "cures" are almost always worse than the disease, and that Congressmen have little understanding or appreciation for the unintended adverse consequences of their legislation. 


The failures of Fannie Mae and Freddie Mac, along with subsequent efforts to bail out the institutions that depended on a sound market for mortgages, are one example of such damage.  While Congress has been quick to blame deregulation and Wall Street greed, there is little acknowledgement of the role they themselves played in expanding these institutions, changing their missions, soliciting campaign contributions from them, and protecting them from meaningful oversight when they were found cooking their books and perpetuating fraud on investors.  Fannie Mae and Freddie Mac, unfortunately, are only two of many examples of Congress' power to damage markets. For more examples, look at this website, where from time to time we will add examples of Congressional harm.  We believe Congressional impact will worsen until Americans unite to successfully demand smaller, less intrusive government, and lose tolerance for government’s perpetual assault on industry.

Unfortunately this doesn’t seem to be the current trend.


Post Mortem: The non-traditional concepts presented on this site and followed by the funds managed by Eric Singer drew a lot of both positive interest and derision in the financial press. Searches in Google for these funds revealed content that both praised and ridiculed the notion of benefitting financially from timing based on whether Congress was in session. Fortunately for the funds, none of the bad reviews showing up on page one of Google's search results had much impact because the investors were not likely to invest based on those search results. While it has been obvious for some time that negative content within Google's search results could have serious consequences for the businesses involved, there is no evidence that these opinions influenced the success or failure of the funds involved. Unlike mass market products, investment vehicles were not typically chosen via Google searches, although harmful search results may have contributed to outflows at some point. But the ideas posted here are valuable as examples of intelligent conjecture and the arguments made here are certainly worthy of consideration.






There are several ways for an investor to have broad market exposure that is professionally managed to mitigate the historically deleterious ‘Congressional Effect’ on investment holdings:

1)The Congressional Effect Fund. (Minimum Investment - $1,000 Symbol CEFFX)
The Congressional Effect Fund is a no-load mutual fund launched on May 23, 2008 to provide investors with an easy way to invest in a strategy that seeks to capture historically higher returns (typically seen on days that Congress not in session) via exposure to the broad market as measured by the S & P 500 index on days that Congress is not in session. On days that Congress is in session, the Fund sits aside, investing in interest bearing instruments including, without limitation, treasury bills, other government obligations and bonds, collateralized repurchase contracts, money market instruments, and money market funds. A Fund Fact Sheet, prospectus, account forms and additional information are available on the Congressional Effect Fund website.  Investors seeking to open accounts under $10,000 can do so instantly via an online application offered through the Fund distributor, Matrix Capital Group.

2) Private Money Management (Minimum Investment - $500,000)
Private Money Management is available to institutions, endowments, trusts and high net worth individuals and families through Congressional Effect Management. With Private Money Management, assets are managed in an individual investment portfolio, rather than comingled as in a mutual fund. Your money manager would meet with you to discuss your investment objectives and taylor an investment strategy that is right for you, while always seeking to mitigate the historically deleterious ‘Congressional Effect’. The benefits of opening a privately managed account include, but are not limited to, personalized professional supervision and active individualized management. Congressional Effect Management is an SEC-Registered Investment Adviser.



Eric Singer, Manager of the Congressional Effect Management, first published an article on the general effect of Congress on daily stock prices in an article published in Barron’s in 1992, posted here. Since then, the idea has attracted support and evidence from both the financial and academic community. 

Mr. Singer has been a finance professional for over 25 years. Most recently his practice focused on raising funds for, and investing in, small cap public companies. During the 1990’s, he was head of Corporate Finance at Gerard Klauer Mattison & Co., a research oriented brokerage firm. In the 1980’s, he launched a corporate finance new products group at Smith Barney, and headed a similar group at PaineWebber. He also practiced law for several years and developed real estate. 

He was graduated from SUNY at Stony Brook, where he was Phi Beta Kappa, and Cornell Law School, where he was a member of Law Review.





Congressional Effect

Entry from September 26, 2010 /

The “Congressional Effect” is the name given to the theory that stock prices rise when the Congress is not in session. Eric T. Singer, creator of the Congressional Effect Fund in 2008, had written a paper in the March 2, 1992 edition of Barron’s titled “Legislator, Go Home! –- How Congress Can Help the Stock Market.” Singer’s November 8, 2006 article in the New York (NY) was titled “Congressional Effect.” Singer’s Sun article seemingly denied creating the name himself, stating: “Some observers have called the phenomenon I write about the Congressional Effect.” 

A March 2005 study by Michael F. Ferguson and Hugh Douglas Wiite, Congress and the Stock Market, appears to have coined the name “Congressional Effect.” 

Wikipedia: Congressional Effect 
The Congressional Effect is a stock market phenomenon where stock prices tend to show a correlation in performance and volatility to the operating schedules of the US Congress. The phenomenon was coined as “The Congressional Effect” by Eric T. Singer, a New York based finance professional and mutual fund manger. 

Singer found that in aggregate, the S&P 500 Index performs better on days both houses of Congress are Out of Session versus days when both houses of Congress are In session. There is also a decrease in volatility as measured by Standard Deviation. 

Congressional Effect Management found that the S&P 500 Index had a daily annualized price appreciation of 0.31% on days Congress was In session from January 1, 1965 to December 31, 2008. Over that same time span there was a 16.15% annualized price gain on trading days Congress was Out of session. From January 1, 2008 to December 31, 2008 Congressional Effect Management shows an acceleration of the Congressional Effect. Over the aforementioned span In session days saw an annualized price decrease of -12.45% while Out of session days saw an annualized increase of 8.81%. 

The Effect was first reported on in Barrons on March 2, 1992 by Singer and entitled “Legislator, Go Home! –How Congress Can Help the Stock Market”. 

Subsequent Research 
1) March 13, 2006 Michael F. Ferguson and H. Douglass Witte published a piece entitled “Congress and the Stock Market” which concluded, “We find a strong link between Congressional activity and stock market returns that persists even after controlling for known daily return anomalies. Stock returns are lower and volatility higher when Congress is in session. This “Congressional Effect” can be quite large – more than 90% of the capital gains over the life of the DJIA have come on days when Congress is out of session.” 

2) In 1997, a study published by Reinhold P. Lamb, K.C. Ma, R. Daniel Pace, and William F. Kennedy titled “The Congressional Calendar and Stock Market Performance” demonstrated that “almost the entire (DJIA) market rise since 1897 corresponded to the periods when Congress was closed. An open Congress sees only a small market rise. This behavior is amazing given that Congress is open almost twice as long as it is closed.” 

Congressional Effect Fund (CEFFX) 
On May 23, 2008 Singer launched the Congressional Effect Fund (symbol:CEFFX), a mutual fund which seeks to take advantage of the Congressional Effect for investors. 

Congressional Effect Management 
Historical research indicates that, more often than not, when Congress is in session there is a negative effect on equities markets (the “Congressional Effect”) due possibly to investor fear and uncertainty surrounding government action—or possible action – as well as unintended adverse consequences on the stock market of Congressional legislative initiatives. 

Congressional Effect Management has analyzed empirical data from January 1, 1965 through December 31, 2009 to determine the performance of the S&P 500 Index on days that Congress was “in session” (a day when either house of Congress meets for business) and “out of session” (a day when neither house meets). 

For the period from January 1, 1965-December 31, 2009, according to the Library of Congress, Congress was in session each year an average of approximately 66% of eligible business days and out of session an average of approximately 34% of eligible business days. During this period, the S&P 500 had an average annualized price gain of +16.04% (an average daily price increase of 0.06%) on days when Congress was not in session, and an average annualized price gain of +.94% (an average daily price increase of 0.01%) on days when Congress was in session. The average annualized price gain for all days during the period was 5.9% (an average daily price increase of 0.03%). 

We believe that these gains are not coincidental, but rather reflect the cumulative effect of unintended adverse consequences on the U.S. stock market from anticipated and actual Congressional legislative initiatives. We refer to this effect as the “Congressional Effect”. 



How much investment wealth does Congress destroy?


“That government is best that governs least.” It was true when Tom Paine first said it during the American Revolution in 1776, and it is still true today.

Congressional Effect  Management, advisor to the Fund, believes it is especially accurate with respect to how much Congress hurts investment performance. As government has gotten bigger at an accelerating rate, the Fund manager believes the biggest risk to investors in today's market is political risk--the risk  that the rules will change. In the 1990’s, Eric Singer set out to study this issue, and was surprised at the actual magnitude of Congressional wealth destruction revealed in stock market returns. 

Specifically, since 1965, 44 years of empirical data demonstrates that over long periods of time the stock market performs dramatically better on days when Congress is out of session as compared to days when Congress is in session.  Study the chart to the left to see the historical difference in stock market returns on Congressional In Session vs. Congressional Vacation days.

The Congressional Effect Fund was launched in May 2008 as the first mutual fund to specifically seek to reward investors by avoiding, and help the country by exposing, the stock market harm caused by unintended consequences of Congressional action and deliberation.  

Historical research indicates that, more often than not, when Congress is in session there is a negative effect on equities markets (the “Congressional Effect”) due possibly to investor fear and uncertainty surrounding government action -- or possible action – as well as unintended adverse consequences on the stock market of Congressional legislative initiatives. For instance…

I. On October 24, 2007, the House of Representatives held hearings on legislative proposals to reform mortgage practices in an attempt to help consumers cope with rising numbers of mortgage defaults. On that one day, the Investors Business Daily (“IBD”) Group 196 Index, which includes Mortgage and Related Services Companies, fell from 577.64 to 559.17, suffered a decline of 3.2% across an entire industry. 

II. On Saturday, December 1, 2007, the House reached a compromise on a bill that would impose higher fuel mileage requirements on car manufacturers. The following Monday, IBD Group 105 Index, which includes car companies,  fell by 9.67 to 642.22, a decline of 1.5%. 

The Advisor believes that the cumulative effects of many similar market responses prevent the market from performing as well on days when Congress is in session than when Congress is recessed.  Of course this effect is best observed over a long period of time and therefore this investment is best suited for long-term investors. [Past performance does not guarantee future results. An investment in the Fund should not be considered a complete investment program.]

The Congressional Effect Fund is the first mutual fund to explicitly seek to minimize investor exposure to potentially negative impact of new and proposed Congressional legislation on the broad stock market. 

The Congressional Effect Fund seeks to capture the historically higher returns on Congressional out of session days by primarily having exposure to price moves of the broad market as measured by the S & P 500 index on vacation days. The Fund does not try to capture the dividends of stocks in the index. Instead, it invests in interest bearing instruments including, without limitation, treasury bills, other government obligations and bonds, collateralized repurchase contracts, money market instruments and money market funds. 

Common Sense Caveats
While 43 years of data is significant, no investment strategy works all of the time. Although it has not happened often over the past 43 years, there could be years where the market responds much more positively on days when Congress is in session as compared to days when they are out of session. For example, in 1997, Congress enacted  significant tax cuts, including a cut in capital gains taxes generally. In that year, the annualized average price increase on the days when Congress was in session was 59.5% (an average daily gain of 0.18% or 18 basis points) as compared to an annualized average price loss of -4.6% (an average daily loss of -0.02% or 2 basis points) when Congress was out of session. 

Investment return and principal value will fluctuate with changing market conditions so that when redeemed, shares may be worth more or less than the original cost.  Please consider the investment objectives, risk, charge and expenses of the investment company carefully before investing. For a prospectus containing this and other important information, click hereor call the Fund at 888.553.4233 or write to the Fund c/o Matrix Capital Group, Inc. 630 Fitzwatertown Road, Willow Grove, PA 19090.  Please read the prospectus carefully before investing or sending money.



A Fund That Bets Against Congress

By KATHY KRISTOF, Contributing Editor July 14, 2011 /

It’s kind of a gimmick—a fund that’s in cash when Congress is in session and owns stocks when legislators leave town. But is it a gimmick that can make you money?

If you think Congress is more of a hindrance than a help, you have plenty of company. Throughout U.S. history, comedians and commentators have been taking potshots at our national legislators. Will Rogers, for instance, said he couldn’t think up half the number of funny things in his lifetime as Congress could pass in one session. Mark Twain contended that members of Congress were America’s only “native criminal class.”

Eric Singer has taken Congressional ridicule a step further. He runs an obscure mutual fund that aims to profit from the notion that Congressional bungling is so bad that the stock market will sink when legislators report to work and rally the moment they take off on vacation. “There’s all this market folklore about the January effect; the Christmas rally; the Easter rally,” he says. “I realized that there was one unifying factor with all of those rallies: Congress was not in session.”

So to put theory into action, Singer launched the Congressional Effect Fund (CEFFX) in May 2008. The fund, which holds only $16 million in assets, moves to cash when legislators clock in and buys the moment they go away. When legislators are in session, he’s 100% invested in safe, short-term securities, such as Treasury bills and money market funds. On legislative breaks -- and even long weekends -- he uses futures contracts and exchange-traded funds to replicate the performance of Standard & Poor’s 500-stock index. “We have tried to build a portfolio that filters out the short-term noise to concentrate on legislative risk,” says Singer, who was an investment banker for 25 years, raising money for small companies, before he launched the fund.

Singer says he has tested his theory going back 46 years -- roughly 12,000 trading days. In that time, the market advanced at an average annualized rate of just 0.9% when Congress was in session and 16.6% when it was on hiatus. His explanation: Buyers hate uncertainty, and legislators create that in spades, whether they’re proposing new taxes or new regulations.

But the “sell in session and buy on breaks” strategy forces a lot of buying and selling, which triggers plenty of trading costs. The fund’s operating expenses are also high -- 3.49% in 2010, although the adviser has agreed to limit annual costs to shareholders to 1.5% for the time being. Even with those relatively high costs, the fund has beaten both the S&P 500 and fund tracker Lipper’s flexible-fund category since its launch. From then through July 8, the fund returned an annualized 3.1%, compared with 1.5% annualized for the S&P index and 3.0% for the flexible group.

But Lipper analyst Jeff Tjornehoj isn’t impressed. He says it doesn’t make sense to compare Congressional’s performance to a stock-market index because the fund is in cash more often than it is in stocks. In fact, Congressional’s own literature notes that Congress is out of session just 35% of the time, which means the fund’s investments would be in cash two-thirds of the year.

If you compare Congressional to other funds that have flexible portfolios -- in other words, funds that can invest wherever they find the best opportunities -- Singer’s fund doesn’t look as attractive. Over the past year in particular, Congressional has underperformed dramatically, earning just 5.5%, compared with 21.9% for flexible funds overall. “Because Congress is in session most of the time, you have very little equity exposure for most of the year,” says Tjornehoj. That might serve you well when the market is tanking, but it guarantees that the Congressional fund will lag when the market rallies.

Besides, Tjornehoj doesn’t buy into Congressional’s basic concept. He considers buying and selling based on legislative sessions an investment fad -- much like basing stock prognostications on women’s hem lengths or who won the Super Bowl. “There’s a correlation, but I’m not sure that you’ve got a cause and effect.”

At a time when many Americans are understandably disgruntled with legislators, who seem more bent on underscoring the divide between Republican and Democrat than passing legislation to tackle the nation’s most-pressing economic problems, Congressional Effect has a visceral appeal. But the fund does look like a gimmick, and knock-your-socks-off back-tested results often have a way of backfiring once someone tries to put them into practice in the real world.

If you’re annoyed with Congress, it may make more sense to write a letter to your legislators -- or take your frustrations out at the voting booth -- than to express your discontent through your investment portfolio.



Lifestyle ETFs and investment products based on belief systems

Posted November 4, 2013 by Joshua M Brown /

Socially responsible investing (SRI) is fine, I’m not here to pick on people who genuinely believe they can do good in this world by virtue of which stocks their mutual fund refuses to own. Whatever, it’s a harmless delusion (even if it has very little real-world impact and is probably a higher-fee scam in disguise in many cases). I counsel clients who are into this sort of thing to look into impact investing or charitable organizations as opposed to SRI products or strategies, but that’s a story for another day.

So what about politically-aware investing?

Isn’t this the same kind of thing as SRI in a different costume? From a marketing standpoint, I’d bet it’s a homerun – people like to align themselves with likeminded individuals – so why not offer them a likeminded investment vehicle? The gold funds have been onto this idea for decades.

Just for fun, launch an ETF with the ticker symbol $AYN built around an index of companies with objectivist cultures like lululemon and see how much money comes in after doing some targeted media on the concept. Do some backtesting so you can find a carefully chosen timeframe over which the strategy beats a benchmark of your choice. You get the idea, this shit sells itself.

Take, for instance, the Congressional Effect Investor Fund (CEFFX). This is a fund that appeals to those who believe government does more harm than good and so it only invests when Congress is out of session. You can always find some moron to buy anything – despite trading flat for three years while the S&P has soared to new heights, there are still $12 and a half million dollars sloshing around inside this Frankenstein. Can you imagine whose money that is? Could be, like, a dead guy whose decedents haven’t gotten around to filling out the estate paperwork in order to liquidate it.

Here’s Index Universe on a new ETF IPO that’s already raised $150 million out of the gates. It’s been launched by an investment advisory firm and recommended, presumably, to people who confuse politics with investing or care more about the former than the latter. I’ll let you read the description with no additional comment:

The well-established firm played a key role in developing and launching both the ETF and its issuer, the nonprofit firm Vident Financial. Following the challenges of 2008-2009, Ronald Blue & Co. set out on a long-form research project to see if it could develop strategies that would provide better outcomes for clients, while aligning with the firm’s overall values.

That research led to a strategy focused on the concept of human flourishing, tempered by the principle of the inherent uncertainty of day-to-day life and led to Vident Financial.

The new ETF reflects these concepts by tilting its exposure to countries and companies that have the right environment to support growth, including low debt, strong rule of law, economic freedoms and other factors. At the same time, it incorporates a risk-management and valuation strategy developed by Lattice Strategies, an ETF-focused strategy firm based in San Francisco, to ensure that the ETF provides strong risk-adjusted returns.

I have no idea how the returns will be, perhaps they will be excellent. Or perhaps they won’t. I doubt it will matter, so long as the message stays intact and the affinity group is large enough to create an active marketplace for the concept over time.

Bon chance, true believers.



Pre-launch Alert: PSP Multi-Manager (CEFFX)

September 04, 2014 /

In a particularly odd development, the legal husk of the Congressional Effect Fund is being turned to good use.  As you might recall, Congressional Effect (CEFFX) was (along with the Blue Funds) another of a series of political gestures masquerading as investment vehicles. Congressional Effect went to cash whenever (evil, destructive) Congress was in session and invested in stocks otherwise. Right: out of stocks during the high-return months and in stocks over the summer and at holidays. Good.

The fund’s legal structure has been purchased by Pulteney Street Capital Management, LLC and is soon to be relaunched as the PSP Multi-Manager Fund (ticker unknown). The plan is to hire experienced managers who specialize in a set of complementary alternative strategies (long/short equity, event-driven, macro, market neutral, capital structure arbitrage and distressed) and give each of them a slice of the portfolio.  The management teams represent EastBay Asset Management, Ferro Investment Management, Riverpark Advisors, S.W. Mitchell Capital, and Tiburon Capital Management. The good news is that the fund features solid managers and a low minimum initial investment ($1000). The bad news is that the expenses (north of 3%) are near the level charged by T’ree Fingers McGurk, my local loan shark sub-prime lender.



Investors should note the following risks associated with "Congressional Effect" investing:  The ability to meet it investment objectives is directly related to investment of assets - whether in managed account form or Fund form.  Principal investment strategy and investment methodology is based on the Congressional Effect, but this investment strategy and methodology has not been widely applied in practice.  Use of an investment strategy based on the Congressional Effect may be ineffective because the Congressional Effect may not produce expected results, either for short or long-term periods. Moreover, the Advisor cannot give any guarantee that the Congressional Effect observed during past periods will continue to be observed in the future.  Therefore, there is no guarantee that the desired results with be produced.  An investor may lose money.

While the Advisor periodically (at least daily) inquires as to whether each house of Congress is in session, the Advisor may not be able to make an accurate determination as to whether or not Congress is in session or intends to be in session at all times due to difficulties in obtaining legislative schedules, and unexpected or unannounced changes in such schedules.  Because the investment strategy depends in large part on accurately determining when Congress is in session, inaccurate information about whether or not Congress is in session could negatively impact investment performance.

Because the Advisor generally only expects to achieve capital appreciation during periods when Congress is out of session, Congressional Effect investing may be susceptible to market timers who attempt to invest immediately before Congress is in recess, and divest immediately before Congress convenes.  Such market timing could present risks for investors with long-term interests in the strategy, which may include, among other things, interference with efficient portfolio management, increased brokerage and administrative costs, forcing the Advisor to hold excess levels of cash to meet redemption requests, and an increase in costs. Although the Advisor has adopted certain policies and procedures intended to identify and to discourage frequent trading, including a redemption fee, it cannot ensure that all such activity can be identified or terminated.

Finally, the Advisor will buy and sell portfolio securities in response to whether Congress is in session or out of session, without regard to the length of time they have been held.   The Advisor anticipates a generally substantial movement all of its portfolio from “in session” investments (Cash and Cash Equivalents) to “out of session” investments (S&P 500 futures contracts) and vice versa each time Congress changes its session status.  Since Congress’s in session status can change daily, the  portfolio may change rapidly (e.g., within a single trading day) a number of times during the year.  Since portfolio turnover involves paying brokerage commissions and other transaction costs, portfolio changes cause additional expenses.  

Privacy Policy
We collect only information that is needed to serve you and administer our business. In the process of serving you, we become stewards of your “nonpublic personal information” - information about you that is not available publicly. This information comes to us from the following sources:

  • Information you provide directly to us on applications or other forms, correspondence or through conversations (such as your name, social security number, address, phone number, assets, income, date of birth, occupation, etc.).
  • Information about your transactions with us, our affiliates or others (such as your account numbers, account balances, transaction details and other financial information).
  • Information we receive from third parties (such as your broker, financial planner or other intermediary you hire). We limit the collection and use of nonpublic personal information to that which is necessary to administer our business and provide superior service.

WE CAREFULLY LIMIT AND CONTROL THE SHARING OF YOUR INFORMATION. In order to protect customer privacy, we carefully control the way in which any information about you is shared. It is our policy to not disclose any nonpublic personal information about you or former customers to anyone, except as permitted or required by law. We are permitted by law to disclose all of the information we collect as described above to our affiliates, Advisors, sub Advisors, transfer agents, broker-dealers, administrators or any firms that assist us in maintaining and supporting the financial products and services provided to you. For example, our transfer agents need information to process your transactions, and our outside vendors need information so that your account statements can be printed and mailed. However, these parties are not permitted to release, use or transfer your information to any other party for their own purpose.

WE ARE COMMITTED TO THE PRIVACY OF YOUR NONPUBLIC PERSONAL INFORMATION AND WILL USE STRICT SECURITY STANDARDS TO SAFEGUARD IT. We are committed to the security of your nonpublic personal information. Our employees and others hired to work for us are held accountable for adhering to strict policies and procedures to prevent any misuse of your nonpublic personal information. Employees are bound by this privacy policy and are educated on implementing our security principles and practices.

We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information. Our operational and data processing systems are in a secure environment that protects nonpublic personal information from being accessed inappropriately by third parties. This privacy policy explains how we handle nonpublic personal information; however, you should also review the privacy policies adopted by any of your financial intermediaries, such as a broker-dealer, bank, or trust company to understand how they protect your nonpublic personal information in accordance with our internal security standards.

This privacy policy notice is for the Congressional Effect Family of Funds (the “Trust”) and Congressional Effect Management, LLC the Trust's investment Advisor.