The Market Has Spoken, and It Turns Out Nobody Wanted to Invest in Democracy

The Democracy International Fund ETF (DMCY) will be liquidated on February 23, 2026. It was five years old. There will be no memorial service.

Born on March 31, 2021, a moment of peak institutional idealism, when ESG was still a growth industry and before “values-based investing” became a phrase that made compliance officers nervous – “DMCY” arrived with a genuinely noble ambition.

The fund, run by Democracy Investments of San Diego, tracked the Economist Intelligence Unit's Democracy Index to overweight countries with free elections, civil liberties, and independent judiciaries, while underweighting authoritarian regimes. It used a license to The Economist's Democracy Index. It had a hotline number: 877-PRO-DMCY. It had a mission statement that could have been the opening paragraph of a political science dissertation.

It had, at peak, about $10 million in assets.

For context: a 2X leveraged ETF on a mid-cap photonics company will likely collect more than that in its first week of trading.

The Concept Was Sound. The Timing Was Something Else.

DMCY launched just as the global democracy league tables were entering what diplomatic analysts might call “an adjustment period.” The fund's index underweighted Russia and China. It overweighted Western Europe, Japan, Australia, and Canada, sensible choices, one would think.

The problem is that between 2021 and 2026, international equity markets in the democracies the fund championed broadly underperformed the S&P 500 by a significant margin. Over the past year, DMCY returned 3.17% against a category average of 5.02%. Over three years: 28.99% versus a category average of 31.24%.

Moral clarity, it turns out, did not constitute a performance edge.

Meanwhile, the authoritarian states DMCY was designed to punish with capital underweighting largely shrugged. China had its own problems, but not because a $10 million ETF in San Diego was giving it a stern look.

The Numbers Tell a Grim Story

At the time of its delisting, DMCY had approximately $10 million in assets. To put that in perspective:

• The Grayscale Sui Staking ETF (GSUI), which launched on the same day DMCY's delisting was recorded, has waived its fees until it hits $1 billion in AUM, suggesting it expects to collect the entire DMCY asset base roughly 100 times over, in weeks.

• Fund flows over the past six months were negative $3.21 million. The fund was not just unpopular; investors were actively leaving.

• DMCY's market cap was $9.95 million. A single institutional investor, Kingsview Wealth Management, owned enough to move the needle. When Kingsview trimmed by 4.5%, it was news.

The expense ratio was competitive 0.55%, modest for a thematic fund but that's a bit like noting that a restaurant had reasonable prices right before it closed.

The Awkward Timing

Here is where the story gets genuinely poignant, or possibly just ironic, depending on your disposition.

DMCY's delisting notice the official “this fund is being liquidated on February 23, 2026” moment arrived on February 18, 2026, in the same listings file as a SUI staking ETF, three leveraged single-stock ETFs on nuclear fuel and fibre optic companies, and a fund called the “Genius Money Market ETF.”

In the grand bazaar of the modern ETF market, where financial engineering is applied to Bitcoin miners, Coherent Corp, and Centrus Energy's uranium enrichment business with equal enthusiasm, a principled international equity fund weighted by democracy scores turned out to be the one product investors passed on.

There is a joke in there somewhere. Several, probably.

What Went Wrong?

The honest answer is: nothing, structurally. DMCY did what it said it would do. The index methodology was transparent. The fees were reasonable. The mission was clear.
The problem was market positioning in a world where “international equity with a democracy tilt” is a very hard sell when U.S. large caps are posting the numbers they've been posting.

DMCY competed in the Foreign Large Blend category a graveyard of worthy, sensible, underappreciated funds against products backed by Vanguard, BlackRock, and Franklin Templeton. It had 205 holdings. It rebalanced quarterly. It was, by any reasonable standard, a perfectly competent fund.

It was also, by the standard of the current ETF market, impossible to get excited about. Nobody was making memes about its exposure to Norwegian equities.

A Brief Eulogy

DMCY believed that capital could be a force for democratic reform. That by withholding investment from authoritarian regimes and directing it toward free societies, markets could send a signal.

The market sent a different signal back.

It turns out that in February 2026, investors would rather have 2X daily exposure to a nuclear fuel enrichment company than a democracy-weighted portfolio of international large-caps. Whether that is an indictment of the ETF, the times, or both, is left as an exercise for the reader.

The fund will be liquidated on February 23, 2026.

Democracy Investments can be reached at 877-PRO-DMCY.