It’s been three years since Donald Trump was elected U.S. President. Since his election, the S&P 500 is up more than 45%, the Dow Jones Industrial Average is up more than 50% and the Nasdaq Composite is up 60%.
Such monumental gains have come despite occasional market crashes due to U.S.-China trade tensions. Trump’s promises of tax cuts, deregulations in the financial sector and bringing back foreign jobs to America boosted the markets.
Trump’s Agenda & How It Impacted the Broader Market
Donald Trump is in favor of beefing up public spending by hundreds of billions of dollars on infrastructure. In fact, he had proposed $1 trillion infrastructure spending financed by new tax credits to goad private equity investors. Increased outlays were aimed at improving roads, bridges and telecommunications.
President Trump’s administration passed a tax plan in December 2017 that was enacted in January 2018, and revolved mainly around corporate tax cuts and personal tax rate adjustment. The plan cuts the corporate rate from 35% to 21% (read: Tax Bill: What ETF Investors Need to Know).
The Trump administration also proposed a move from the worldwide tax system to a territorial system, allowing companies to send their offshore profits back to the United States without extra taxes. Investors should note that tech behemoths hoard huge cash overseas and benefited the most from Trump's repatriation tax policy.
Defense stocks have been another beneficiary. Trump is a proponent of boosting defense budget and also mentioned this year that the United States has secured a $100 billion increase in spending from NATO allies (read: Why Aerospace & Defense ETFs are Soaring in 2019).
Trade war with many countries, mainly China, deserves special mention. This was part of his protectionist agenda and the "Buy American and Hire American" policy. However, the trade war caused recurrent market crashes, which is why the United States and China are now apparently on the verge of signing an initial-level trade deal (read: ETFs to Buy on Phase 1 of U.S.-China Trade Deal).
Against this backdrop, investors might be interested in checking out the ETFs that have gained materially in Trump’s presidency. Below we highlight a few that have been the top performers in the past three years (as of Nov 12, 2019).
ARK Web x.0 ETF (ARKW - Free Report) – Up 146.2%
The fund seeks long-term growth of capital. It is an actively managed ETF that invests primarily at least 80% of its assets in domestic equity securities and U.S. exchange traded foreign equity securities. The fund charges 75 basis points (bps) in fees.
Aberdeen Standard Physical Palladium Shares ETF (PALL - Free Report) – Up 144.5%
This ETF is designed to track the price of Palladium Bullion. The rally was mainly backed by rising global demand and stagnating supply. The fund charges 60 bps in fees.
iShares PHLX Semiconductor ETF (SOXX - Free Report) – Up 114.9%
The underlying PHLX SOX Semiconductor Sector Index measures the performance of U.S. traded securities of companies engaged in the semiconductor business. The fund charges 46 bps in fees.
Invesco Dynamic Software ETF (PSJ - Free Report) – Up 102.9%
The underlying Dynamic Software Intellidex Index comprises stocks of software companies. The index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
Vanguard Information Technology Index Fund ETF Shares (VGT - Free Report) – Up 101.1%
The underlying MSCI US Investable Market Information Technology 25/50 Index is designed to transition in and out of securities affected by pending updates to the information technology sector. The fund charges 10 bps in fees.
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