Trump Accounts Launch: How the Money Will Be Invested

Trump Accounts, the new tax advantaged savings accounts for children, will default all deposited money into the State Street SPDR Portfolio S&P 500 ETF (SPYM) when they launch on July 4. The Treasury Department picked that fund because it tracks the S&P 500 at one of the lowest costs available, giving families broad stock market exposure without much drag from fees.

At a Glance

• Trump Accounts launch July 4, with contributions from parents and others starting July 5.
• All money defaults into SPYM, an S&P 500 index fund with a 2 basis point expense ratio.
• The Treasury will add other approved index funds as options in the coming months.
• Babies born between 2025 and 2028 get a one time $1,000 deposit from the government.
• Annual contributions from family, friends, and employers are capped at $5,000, with $2,500 allowed per person.

Why the Treasury Chose This Fund

The Treasury's reasoning is pretty simple: cost. SPYM charges just 2 basis points, which works out to 20 cents a year for every $1,000 invested. For an account meant to grow over 18 years or more, shaving off even a few basis points in fees can add up to real money by the time a child reaches adulthood. Treasury officials said keeping expenses low for the public was the deciding factor in choosing a default fund, rather than picking whichever provider offered the flashiest brand name.

Until families are given more choice, every dollar that lands in a Trump Account, whether from a parent, a grandparent, a friend, or an employer, gets funneled automatically into this single fund. That includes the government's own contribution.

Other Funds Waiting in the Wings

SPYM won't be the only option forever. The Treasury Department says it plans to open up additional low cost index funds for account holders to choose from in the coming months, once the infrastructure for parental selection is ready. Funds already cleared for eventual use include the iShares Core S&P 500 ETF (IVV), the Vanguard Total Stock Market ETF (VTI), the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM), and the iShares Core S&P Total US Stock Market ETF (BITO39.SA). Each was vetted largely on the basis of cost, echoing the logic behind picking SPYM as the launch default.

How the Money Gets In

Treasury Secretary Scott Bessent framed the accounts as a chance for more Americans to get an early stake in the stock market.