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ETF News And Commentary

The presidential election is now just a day away and the tightening race has put investors on edge. The new email probe announced by the FBI added more uncertainty to the outcome and even though Hillary has been “cleared’ by them now, a lot of damage to her campaign has already been done.

Before the disclosure, Hillary Clinton had a comfortable lead over Trump in almost all polls but the lead has shrunk over the past few days and the latest Wall Street Journal/NBC survey shows Clinton leading Trump by just four points 44% to 40% nationally.

Many other polls also show Clinton ahead of Trump but the lead is within the margin of error. And, investors are also reluctant to rely on the polls after the Brexit vote. (Read: Clinton Gets Past FBI Investigation: ETFs in Focus)

The market had earlier priced in a Clinton victory but investors have become jittery as Trump started gaining in the homestretch of the presidential race.

That’s the main reason why stocks sold-off over the past few days. They are rallying today the FBI found no “wrongdoing” by Clinton.

Many nervous investors are hedging their portfolios for a possible sharp sell-off if Trump wins the election. (Read: ETFs to Watch if Trump Makes it to White House)

Some sectors will fare better under Hillary and others may prosper if Trump wins the election. So, it is time that the investors take a look at their portfolios and be prepared to realign their portfolios for the result of the election.

Clinton and Trump strongly disagree on most policy issues but there are a few issues that they actually agree on and those areas of the market  will likely do well no matter what happens tomorrow.

Long-Term Winner: Broader Stock Market

Most analysts expect a big market sell-off if Trump wins and a moderate relief rally if Clinton wins. A sell-off could be an opportunity for long-term investors to buy high-quality stocks and ETFs.

Remember, the longer-term direction of the stock market will be determined by the economy and monetary policy. The US economic outlook has clearly been brightening of late and It appears likely now that earnings growth will be positive this quarter after five consecutive quarters of decline. (Read: 7 Inverse ETFs to Play Election Uncertainty)

Many statements/promises made by candidates on the campaign trail may just turn out to be campaign rhetoric and not be followed up by any policy imitative.

Even if Trump wins the election, it’s not going to be easy for him to get congressional support for building walls or blocking trade. The US constitution ensures limits on president’s freedom of action.

So, if you are a long-term investor, buy iShares Core S&P 500 ETF (IVV - Free Report) ), which is an ultra-cheap (expense ratio just 4 basis points) way of getting diversified exposure to all S&P 500 companies. SPDR S&P 500 ETF (SPY - Free Report) , which charges just 9 basis points is another great option.

Gold

Most analysts agree that a Trump victory would be bullish for gold. Per HSBC, gold prices could surge to $1500 an ounce by the end of 2016, up ~16% from the current levels, if Trump wins the election. In addition to greater geopolitical risks that a Trump win entails, higher government spending and protectionist trade policies would also benefit the metal.

According to HSBC, a Clinton presidency would also benefit gold though to a lesser degree. They believe that Hillary also “taken a progressively more protectionist and less free trade stance” which could send gold to $1,400 by the end of this year.

Take a look at iShares Gold ETF (IAU) which provides a low-cost (expense ratio 25 basis) of gaining exposure to gold.

Infrastructure and Defense

Both Clinton and Trump have expressed enthusiasm for lifting defense spending. Take a look at top-ranked defense stocks like Northrop Grumman (NOC - Free Report) or ETFs like iShares Aerospace & Defense ETF (ITA).

Infrastructure spending may also get a boost no matter who occupies the White House next year. Hillary has a $275 billion plan to improve US infrastructure over the next five years. This included $25 billion to capitalize a federal infrastructure bank.

Trump has said he’ll spend more than $500 billion to rebuild infrastructure and will finance the spending with debt. His plan however lacks details.

ETFs like iShares Global Infrastructure ETF (IGF - Free Report) or stocks like Deere (DE - Free Report) and Caterpillar (CAT - Free Report) are worth a look.

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