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6 Trade-Proof Sector ETFs to Follow if No Deal is Cracked

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Almost two long years, U.S.-China trade tensions have reached a tipping point as the deadline for the interim “phase one” deal is fast approaching. A 15% tariff on roughly $156 billion worth of smartphones, laptops and toys imported from China will be enacted on Dec 15, unless a deal is cracked.

Amid such a scenario, investors might be interested in trade-proof sectors, if the U.S.-China trade deal fails to materialize. Mad Money host Jim Cramer highlighted some sectors in this regard, which have less exposure to the development in U.S.-China trade. Here are a few.


Cramer’s top pick was telecom, particularly Verizon (VZ - Free Report) , AT&T T and CenturyLink CTL. These stocks mostly have domestic exposure and are likely to benefit from a dovish Fed. Investors should also note that these stocks generate solid yields and should prove to be great buys if there is no trade deal and the resultant decline in bond yields. Telecom fund iShares U.S. Telecommunications ETF IYZ should thus be in focus.

Health Insurers and Hospitals

This segment is almost totally domestic-focused. Companies likeUnitedHealth Group UNH and HCA Healthcare Inc. HCA have good exposure to iShares U.S. Healthcare Providers ETF IHF, while Tenet THC and Centene CNC have a place in SPDR S&P Health Care Services ETF XHS. Investors can also consider funds likeiShares Evolved U.S. Healthcare Staples ETF IEHS.

Oil Refiners

Per the source, oil refining companies at Permian Basin have “no exposure to China” and thus these are tariff-proof. Moreover, still-low oil prices are good for refining companies as these use crude as their input. VanEck Vectors Oil Refiners ETF CRAK emerges as a good pick in this regard.

Cyber Security

“The cybersecurity stocks are natural hedges against China, North Korea and Russia, the big three state sponsors of cyberterrorism.” Analysts’ favorite cybersecurity companies are Fortinet FTNT, Proofpoint PFPT and Palo Alto Networks PANW. ETFMG Prime Cyber Security ETF HACK looks to win from this trend.


According to the NAHB, the U.S.-China trade war has affected $10 billion worth of goods used in the homebuilding industry. While this will likely hurt the pace of homebuilding, the impact is probably not that severe.

U.S. homebuilding bounced back in October and permits for future home construction soared beyond a 12-year high. Apart from costs, the homebuilding sector is not that dependent on China. A low-interest rate environment arising out of a no-deal situation will also work wonders for the space. SPDR S&P Homebuilders ETF XHB thus appears almost trade-resistant.


U.S. utility companies have less to do with China. And these are also good bets amid an edgy operating backdrop. Utilities Select Sector SPDR Fund XLU draws attention in this regard.

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