Trump bans children from ethical investing
Donald Trump will ban a government-backed children’s savings account from investing in environmental, social and governance (ESG) funds.
The White House said a newly launched fund for under-18s – known as “Trump Accounts” – will bar ESG investments to protect them from “political activism”.
Trump Accounts, which launched last month, will let all American children under 18 invest up to $5,000 (£3,666) a year in US stock indexes, including the S&P 500.
However, Scott Bessent, the US treasury secretary, said: “Corporate America has rejected ESG ideology, and we will not allow it to be a part of Trump Accounts.
“These accounts exist to build financial security for America’s children, not to advance political activism or ideological agendas.”
Mr Trump has repeatedly criticised the ESG movement, warning it has become “a way to attack American business”.
The Trump administration’s policies have clashed with the aims of the ethical investors, with the US president pushing to increase American oil production under the mantra “drill baby, drill”.
ESG funds, which typically exclude weapons manufacturers, tobacco companies and oil and gas companies, enjoyed soaring popularity after the financial crisis, but have fallen out of favour because of recent poor performance.
Mr Trump introduced his child-friendly saving accounts as part of his landmark One Big Beautiful Bill tax reform last year.
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Under the scheme, children born between 2025 and 2028 will also be eligible for one-off payments of $1,000 each to invest in stocks through the low-tax, low-cost accounts.
The US government has said its Trump Accounts aim to help children build their savings by reducing the costs of investing.
Mr Bessent said: “Every dollar in a child’s Trump Account should be working toward that child’s financial future, not diminished by unnecessary fees.
“Under president Trump’s leadership, Treasury is putting simple, common sense protections in place to help families keep more of their investment returns.”
Last month, the US treasury said it had picked an S&P 500 exchange-traded fund, run by the American investment giant State Street as the default investment for all new Trump Accounts.
However, the US government is considering expanding the scheme to let children invest in various US-focused index funds run by other Wall Street giants, including Vanguard and BlackRock.
Frank Bisignano, the chief executive of the Inland Revenue Service, said: “For a child investing over decades, even small differences in annual costs may have a meaningful effect on the amount available in adulthood.
“By emphasising low-cost index investing, the proposed rules seek to maximise the share of investment returns that remains in each child’s account.”