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Impact Summary of the "Invest America" Plan on Robinhood and Index ETFs

On June 9, 2025, U.S. President Trump announced the "Trump Accounts" pilot program at the "Invest America" roundtable meeting at the White House. The program will establish a $1,000 investment account for newborns who are U.S. citizens born between January 2025 and December 31, 2028, to invest in U.S. stock index funds. Guardians can contribute up to $5,000 annually, with restricted fund withdrawals (50% at age 18, for entrepreneurship or education at age 25, and unrestricted at age 30). Vlad Tenev, CEO of Robinhood (HOOD.US), stated that the company would provide technical and financial support. The program is part of the House's "Great America Act" and is pending Senate approval. This article summarizes the plan's impact on HOOD and index ETFs (e.g., SPY), based on an estimated 3.55 million newborn citizens.

Newborn Data and Fund Scale

According to the U.S. Centers for Disease Control and Prevention (CDC), 3.59 million babies were born in the U.S. in 2023, with a slight decline in birth rates in recent years (3.66 million in 2022). The Fourteenth Amendment to the U.S. Constitution grants birthright citizenship (jus soli), meaning 99% of newborns (approximately 3.55 million) are citizens eligible for the "Trump Accounts." Previous estimates of 2.7 million newborns may have considered restrictions for children of non-citizen parents (e.g., a 2025 Trump executive order attempting to exclude children of undocumented immigrants, which was halted). Under current policies, 3.55 million is more accurate, bringing an initial $3.55 billion inflow into index funds.

Impact on Robinhood (HOOD)

As the technical support provider for the program, Robinhood demonstrates its retail investment advantages. The analysis of its impact is as follows:

Short-term (Stock Price and Sentiment):

Positive Drivers: Managing 3.55 million accounts strengthens Robinhood's technology and growth expectations. HOOD's stock price rose 11.7% in June to $73.91, driven by program participation and the Bitstamp acquisition. With a market cap of $63 billion, HOOD meets S&P 500 inclusion criteria. If confirmed in June rebalancing, institutional buying could further boost the stock price.
Risks: The stock price may have already priced in some positives. If the bill fails or HOOD is not included in the S&P 500, a pullback is possible. HOOD is highly volatile (range: $13.98-$77.8 over the past year), so legislative progress should be monitored.

Long-term (Business Growth):

Users and AUM: 3.55 million accounts expand the user base (currently 15 million monthly active users), increasing AUM ($187 billion) by about 2%. Guardian contributions could further boost scale.
Revenue: Trading revenue (63% of total) will benefit from increased account activity, while interest income (31%) and subscription fees (6%) will grow due to higher cash balances and Robinhood Gold adoption.
Strategy: The program reinforces Robinhood's transition from a brokerage to a comprehensive financial services provider (e.g., wealth management, AI tools), but it must manage technical investments and regulatory risks (e.g., a 2025 FINRA fine of $26 million).
Competition: Fidelity, Webull, and others may compete for market share, but Robinhood leads with its low-cost and mobile advantages.

2.7 Million Comparison: If only 2.7 million accounts are created, fund inflows drop to $2.7 billion, reducing AUM and revenue potential by 31%, but 3.55 million enhances HOOD's outlook.

Impact on Index ETF (SPY)

Funds will be invested in index funds like SPY (tracking the S&P 500, expense ratio 0.095%). Analysis:

Short-term (Price and Inflows):

Limited Impact: $3.55 billion in annual inflows is 0.59% of SPY's AUM ($600 billion), unlikely to drive prices (June price: $600.025, up 10.2% YTD). Tech stocks and macro factors dominate.
Sentiment: The plan boosts confidence in U.S. stocks. Tenev calls it a "wealth engine," potentially increasing retail demand for SPY and VOO. Legislative uncertainty may cause volatility.

Long-term (Market Structure):

Fund Accumulation: $35.5 billion in inflows over 10 years (excluding compounding) boosts SPY's AUM. At a 7% annual return, $1,000 grows to ~$2,000 in 10 years and $4,000 in 20 years.
Retail Growth: 3.55 million accounts expand the retail investor base, benefiting low-cost ETFs like SPY, VOO, and VTI. Vanguard may further reduce fees.
Risks: Market corrections or tech stock concentration could impact account values and confidence.

2.7 Million Comparison: $2.7 billion in annual inflows reduces the long-term impact by 31%, but the trend remains.

Challenges and Outlook

Legislation: Senate approval is pending; tax cuts or citizenship disputes may hinder implementation.
Market: Index funds are vulnerable to volatility; a bear market could weaken support.
Fairness: The $5,000 contribution cap may favor wealthier families. Robinhood must balance technical costs and services.

Conclusion

The "Invest America" plan presents opportunities for HOOD and SPY. HOOD benefits short-term from stock catalysts (S&P 500 expectations) and long-term from user and AUM growth, but must manage regulatory and competitive risks. SPY is macro-driven short-term but gains long-term from inflows, though the impact is limited. The 3.55 million newborn estimate amplifies the positive effect by 31% compared to 2.7 million. Investors should monitor Senate voting and Robinhood's execution.

$Robinhood(HOOD.US) $SPDR S&P 500(SPY.US)