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ETFs to Gain/Lose on Trump's Impeachment Talks

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A sudden effort has been noticed by Democrats in favor of impeachment of the U.S. President Donald Trump. Speaker Nancy Pelosi recently said that the U.S. House of Representatives will launch a formal impeachment inquiry into Trump.

The announcement followed reports that Trump may have used his powers wrongly and “sought help from a foreign government to undermine former Vice President Joe Biden, the current Democratic frontrunner, and help his own reelection.” With this, Donald Trump has become the “fourth U.S. president to face impeachment”.

Whatever be the case, the below-mentioned ETFs can top or flop if Trump gets impeached.

Likely Winners

China

Trump’s impeachment hints at the end of the trade war with China. It may resolve the ongoing trade tensions. Investors should note that a recent speech by Trump in the United Nations General Assembly urges nations to opt for nationalism and reject globalism. Trump also issued a message to China that he will not conform to any “bad deal” pertaining to trade negotiations. So, China ETFs like iShares China Large-Cap ETF (FXI - Free Report) may be in a good spot at the moment.

Low-Volatility ETFs

Low-volatility ETFs like Franklin Liberty U.S. Low Volatility ETF (FLLV - Free Report) , SPDR SSGA US Large Cap Low Volatility Index ETF (LGLV - Free Report) and Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) should also prosper as Trump’s impeachment talks may keep the broader market edgy.

Semiconductor

Semiconductor stocks are highly sensible to trade tensions. Per Morgan Stanley equity strategists, “semiconductor and semiconductor equipment companies have the highest revenue exposure to China at 52%” and are thus exposed to maximum risks on rising trade tensions. Chipmaker Qualcomm (QCOM) has 65% revenue exposure to China and Nvidia’s (NVDA - Free Report)  sales exposure to China is 56%, per Goldman Sachs. So, VanEck Vectors Semiconductor ETF (SMH - Free Report) may see gains (read: 6 Sector ETFs in Tight Spot on Renewed Trade Tensions).

Likely Losers

Defense

Trump is a proponent of boosting defense budget. Though any major fiscal tightening is improbable despite a divided government, defense-oriented stocks may lose if Trump’s impeachment talks continue. So, defense and aerospace ETFs like iShares US Aerospace & Defense (ITA - Free Report)  may come under pressure.

Infrastructure & Utilities

Trump is in favor of beefing up public spending by hundreds of billions of dollars on infrastructure. Thus, utilities equity ETFs like First Trust Utilities AlphaDEX Fund (FXU - Free Report) or construction ETFs like Invesco Dynamic Building & Construction Portfolio ETF (PKB - Free Report) may feel some threat.

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