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Trump or Clinton: These ETFs to Face Same Fate
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As we draw closer to the November election, speculation is getting louder in Wall Street. Analysts are busy analyzing the sectors that would benefit if the democrats win or if the republicans come to power (read: Trump, Clinton Race Ahead: ETFs in Contest).
Hypothetical match-ups between the candidates in lead, with emphasis on a Clinton versus Trump contest, are rampant. In the latest poll, the Democrat presidential front-runner Clinton’s edge over likely Republican presidential hopeful Trump shrunk from 5 points last week to 3 points this week.
Though it is too early to comment on who will finally make it to the White House, we can say for sure that the below-mentioned investing areas and their related ETFs will face the same fate no matter who wins in November. Sector ETFs
As per the chief market strategist at Convergex, these sectors are likely to continue gaining or losing irrespective of Democrats or the Republicans win, going by a Financial Times article. Infrastructure Clinton: Hillary Clinton proposed a $275 billion infrastructure plan over the next five years in a bid to create new jobs. Trump: Donald Trump is also in favor of beefing up public spending by hundreds of billions of dollars, in spite of the fact that Republicans intend to check government spending. Beneficiary: Whoever wins, infrastructure and utilities ETFs should get a boost. Utilities ETFs like First Trust Utilities AlphaDEX Fund ( ) and FXU PowerShares S&P SmallCap Utilities Portfolio ETF ( ) are likely to benefit from this trend. PSCU Guggenheim S&P High Income Infrastructure ETF ( GHII), which invests about 50% of its assets in the U.S., may also get a nudge. Defense Clinton: Clinton has been seen as a supporter of ‘ a strong U.S. military’. Trump: He appears aggressive in foreign policy framing from his ‘America first’ speech. He stressed on the need for additional investments in missile defense in Europe and charged the Obama administration for moderate support for Israel. Beneficiary: So, defense and aerospace ETFs including iShares US Aerospace & Defense ( ), ITA SPDR S&P Aerospace & Defense ETF ( ) and XAR PowerShares Aerospace & Defense ETF ( ) should get a lift (read: PPA Upbeat Aerospace & Defense Results Lift ETFs). Healthcare Clinton: Hillary Clinton’s tweet raised concerns over the pricing on life-saving drugs in September. Questions over biotech pricing came on the heels of a 5,455% price hike (in about two months) of a drug called Daraprim, used to treat malaria and toxoplasmosis. This gigantic leap in pricing action was taken by a privately held biotech company Turing Pharmaceuticals. Since then, pharma and health care stocks have been under pressure barring occasional jumps (read: How Hillary Clinton Crushed Biotech ETFs with One Tweet). Trump: He is a believer of the fact that medicare could save as much as $300 billion annually through negotiation with drugmakers. Trump has intended to cancel the Obamacare program. Loser: The above-said comments and tweets may put pharma and health care ETFs on pins and needles. PowerShares Dynamic Pharmaceuticals Portfolio ETF ( ) and PJP Health Care Select Sector SPDR Fund ( ) are some of the ETFs that may face trouble. XLV Energy Clinton: She is expected to embark on new regulations on fracking, the key cause of the U.S. energy sector boom. Clinton proclaimed that she would not back fracking in states or local communities that don’t want it because of pollution issues. Trump: He vows to make Mexico pay for a wall along the border as a part of his immigration plan. If this concept of Trump Wall turns into a reality, it might hamper booming U.S. exports of its natural gas surpluses to Mexico.
Loser: ETFs like VanEck Vectors Unconventional Oil & Gas ETF ( ), FRAK First Trust ISE-Revere Natural Gas Index Fund ( ) and FCG SPDR S&P Oil & Gas Exploration & Production ETF ( ) may come under pressure. XOP
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