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Healthcare ETFs: Winners & Losers in the Light of U.S. Election

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The coronavirus vaccine development effort has put the spotlight on the U.S. healthcare sector in recent months. However, one more reason that makes the sector equally-analyzable now is the U.S. election. The pharma and healthcare sector has always been a key area of discussion ahead of election as policies of the elected candidate mean a lot for the space, which has the second-largest weighting in the S&P 500.

What If Republican Trump Wins?

Per an article published on CNBC, “ahead of the U.S. election, President Donald Trump vowed to protect preexisting conditions by way of executive order even as the Republican Party tries to dismantle the Affordable Care Act through the courts. Democratic nominee Joe Biden, meanwhile, is looking to expand Medicaid and Medicare while protecting the ACA,” per Chantico Global CEO Gina Sanchez.

The death of the Affordable Care Act is good for health insurers as some of these players could not reap enough profits under the full-fledged ACA program. So, a Trump win would benefit iShares U.S. Healthcare Providers ETF (IHF - Free Report) .

Moreover, republicans are apparently less vocal about the price gouging issue (caused by the big pharma companies) than democrats. In May 2018, President Donald Trump revealed his "American Patients First” plan to lessen drug prices in a way that doesn’t appear as a threat to drugmakers. Rather, the plan gave shares of pharma companies a shot in the arm.Thus, iShares U.S. Pharmaceuticals ETF (IHE - Free Report) and Invesco Dynamic Pharmaceuticals ETF (PJP - Free Report) are likely to benefit if Trump wins (read: Pharma & Biotech ETFs Soar on Trump's Drug Plan).

What If Democratic Biden Wins?

Sanchezindicated that Biden intends to “increase equipment manufacturing, to increase testing and tracing, and sort of all of the elements that go with Covid, including novel therapies, and that would hugely benefit biotech. It would also benefit the equipment makers,” as quoted on CNBC article.

Hence, with Biden having considerable chances of winning, medical devices’ ETFs like iShares U.S. Medical Devices ETF (IHI - Free Report) and SPDR S&P Health Care Equipment ETF (XHE - Free Report) are sure to gain. Novel therapies and COVID-19 vaccine hopes should also usher gains for the likes of Global X Genomics & Biotechnology ETF (GNOM - Free Report) (up 11% past month) and Franklin Genomic Advancements ETF (HELX) (up 10.9% past month).

If these aren’t enough, Joe Biden and Democratic vice-presidential nominee Kamala Harris support “adult-use marijuana decriminalization, moderate rescheduling, federal medicinal legalization, allowing states to set their own laws and expunging prior cannabis convictions — though not federal legalization.” The support comes as the Biden camp seeks to boost tax revenues and job creation as well as social justice reform.

This should bode well for Amplify Seymour Cannabis ETF (CNBS - Free Report) (up 8.6% past month), Global X Cannabis ETF (POTX) (up 8% past month) and AdvisorShares Pure Cannabis ETF (YOLO) (up 7.9% past month) if Biden wins (read: Cannabis ETFs Surge On Kamala Harris' Decriminalizing Marijuana Pledge).

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