Though it is hard to predict how the U.S. economy will perform in the Trump presidency, ‘Trumponomics’ or hopes of loose fiscal policies won the first round of the game having injected fresh optimism among investors. Key U.S. equity gauges are on a tear since election defying all odds. Big three U.S. ETFs, (SPY - Free Report) , (DIA - Free Report) and (QQQ - Free Report) added 3.3%, 4.1% and 1.9% in the last 10 days (as of November 21, 2016).
Agreed, there is a long list of investment propositions across the world that have lost due to the election result, but several corners of American investments have been able to stand tall (read: Foreign ETFs to Win or Lose on Trump Victory).
Below we highlight five specific sectors that have benefited the most on Trump win and should definitely thank him for their smart gains. We have also picked the related ETFs which were upgraded to a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy) recently.
With Trump highly expected to bring U.S. manufacturing jobs back to the country and strictly oppose outsourcing, the industrial sector may have started cheering his win. In fact, Trump’s win has called for the rise of a trend of manufacturing ‘reshoring’, instead of offshoring to low cost destinations like China, most of Asia and some parts of Latin America (read: Manufacturing Reshoring Ahead? ETFs to Profit).
Fidelity MSCI Industrials ETF (FIDU - Free Report) –#2 to #1
PowerShares DWA Industrials Momentum ETF (PRN - Free Report) –#3 (Hold) to #1
Industrial Select Sector SPDR ETF (XLI - Free Report) –#3 to #2
Vanguard Industrials ETF (VIS - Free Report) – #3 to #2
Historically, financial stocks performed better with republicans in the White House thanks to their tolerant policies. Also, benchmark U.S. Treasury bond yields have seen a steep rise lately due to rising inflationary expectations on promises of tax cuts and higher fiscal spending. Now, since financial stocks perform better in a rising rate environment, the recent surge in these ETFs is self-explanatory (read: Play Banking Bonanza with These ETFs in Trump World).
SPDR S&P Bank ETF (KBE - Free Report) –#3 to #1
SPDR S&P Regional Banking ETF (KRE - Free Report) – #3 to #1
iShares US Broker-Dealers & Securities Exchanges ETF (IAI - Free Report) – #3 to #1
PowerShares S&P SmallCap Financials ETF PSCF – #3 to #2
Needless to say, Trump is aggressive in his foreign policy. He stressed the need for additional investments in missile defense in Europe and is expected to increase U.S. Military Spending By $500 Billion To $1 Trillion. So, all three defense and aerospace ETFs are top picks now.
Powershares Aerospace & Defense PPA – #2 to #1
SPDR S&P Aerospace & Defense ETF XAR– #2 to #1
Donald Trump is in favor of beefing up public spending by hundreds of billions of dollars on infrastructure. In fact, he is expected to offer $137 billion in tax credits to private construction companies undertaking infrastructure projects.
iShares US Basic Materials IYM– #3 to #1
First Trust Materials AlphaDEX ETF FXZ – #3 to #1
PowerShares DWA Basic Materials Mom ETF PYZ – #2 to #1
PowerShares S&P SmallCap Materials ETF (PSCM - Free Report) – #2 to #1
With Trump winning the U.S. presidential election, the biotech and pharma sectors have regained their lost ground. Since Clinton – who has long been vocal against the price gouging issue in the pharma sector – is no more a threat to the sector, pharma and biotech stocks should get a break from controversies, at least for some time (read: 5 Reasons to Buy 5 Low P/E Biotech ETFs).
VanEck Vectors Biotech ETF BBH– #3 to #1
Fidelity MSCI Health Care ETF FHLC – #2 to #1
First Trust Health Care AlphaDEX ETF FXH – #2 to #1
iShares Nasdaq Biotechnology (IBB - Free Report) – #3 to #2
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>