With the US presidential election just days away, some investors are still unsure about how to play their money according to a certain outcome. But worry not, Saxo Bank has some advice.
In an article published yesterday, the Copenhagen-based firm’s head of FX Strategy, Charu Chanana, put forth a number of potential ETF strategies tailored to either a Donald Trump win or a Kamala Harris win.
Should Trump return to the Oval Office, his policies are likely to put an emphasis on energy independence, defence spending, and deregulation. This could translate to a boost for sectors tied to US domestic markets and natural resources, making the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Energy Select Sector SPDR Fund (XLE) potentially good plays, Chanana says.
In the defence and aerospace industries, higher defence spending under Trump would likely boost the iShares US Aerospace & Defence ETF (ITA), which focuses on companies supplying the aerospace and defence sectors, as well as the SPDR S&P Aerospace & Defence ETF (XAR).
Trump’s proposed deregulation of banking and finance could also make it a worthy industry, with the Financial Select Sector SPDR Fund (XLF), the SPDR S&P Regional Banking ETF (KRE), and the Amundi US Curve Steepening 2-10Y UCITS ETF (STPU) representing notable options.
At the small-cap end of things, Trump’s focus on deregulation and domestic growth could be good for the iShares Russell 2000 ETF (IWM) and the Vanguard Small-Cap Value ETF (VBR), Chanana explains, while anticipated market volatility under Trump would add buoyancy to safe-haven funds like the SPDR Gold Shares (GLD) and the VanEck Vectors Gold Miners ETF (GDX).
Harris, on the other hand, has built her policies around renewable energy, global cooperation, and technology investment.
“Harris’s approach could promote sustainable energy and global trade, creating opportunities in green sectors and possibly providing relief for Chinese equities, which could benefit from a more cooperative foreign policy stance,” Chanana wrote.
Such a push could be good news for the renewables-focused iShares Global Clean Energy ETF (ICLN) and the Invesco Solar ETF, as well as the China-focused KraneShares CSI China Internet ETF (KWEB), which holds major Chinese tech companies, and the iShares MSCI China ETF (MCHI), which offers broad exposure to the Chinese market.
Harris’ emphasis on cooperative foreign policy could also make funds throughout Asia more attractive, such as the iShares Asia 50 ETF (AIA) and the iShares MSCI Emerging Market ETF (EEM), as well as the Mexican-focused Invesco Mexico ETF, which could benefit from policies that favour Mexican exports and investments.
Finally, Harris’ longstanding and broad promotion of sustainability are likely to make the Global X US Infrastructure Development ETF (PAVE) and the Invesco QQQ ETF (QQQ) strong picks, as well as the iShares ESG Aware USD Corporate Bond ETF (SUSC) and the VanEck Green Bond ETF (GRNB), Chanana concludes.
According to the most recent election polling by Reuters, Harris’ lead over Trump has narrowed to a single percentage point — 44% to 43%. While Harris has led Trump in every Reuters poll since she entered the race in July, her lead has steadily shrunk since late September.
Write to Oliver Gray at Mining.com.au
Images: iStock
