Four ETFs to Buy and One to Sell if Donald Trump Becomes President

donald-trumpThis weekend’s issue of venerable business magazine Barron’s took an in-depth look at what types of equities would likely feast or famine if Donald Trump becomes president.

According to the article (subscription required), Trump would be good for pharma, finance, oil, and defense, but bad for hospitals. Here’s a breakdown of Barron’s findings, along with our suggestions on specific ETFs to buy and avoid in the event that Trump wins the election in November.

Trump’s Winners

  1. Biotech plays would probably perform well, because Trump doesn’t want any additional regulation of the industry. ETF to target: iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB), which holds all of the hottest biotech names.
  2. Financial services, including big banks and brokerages, probably would perform very well under Trump, who opposes Dodd-Frank. Trump also wants a moratorium on all new governmental regulation. ETF to target: SPDR KBW Bank ETF (NYSE:KBE), which specifically targets large-cap U.S. banks.
  3. Fossil fuel companies would likely see gains with Trump as president. Trump supports traditional energy production on federal lands as part of his Trump’s America First Energy Plan. ETF to target: Energy Select Sector SPDR ETF (NYSE:XLE), which counts many oil and gas plays as its holdings.
  4. Defense names should also perform well, because a combination of a Republican Congress and Trump would probably push through a larger defense budget than Hillary Clinton would. ETF to target: iShares Dow Jones US Aerospace & Defense ETF (NYSE:ITA), which holds all of the largest defense contractor stocks.

Trump’s Loser

  1. Hospital operators would be a bad investment idea for a Trump presidency. He wants to repeal the Affordable Care Act, which would make it tougher for many lower-income people to get health insurance, and thereby reduce their visits to hospitals. ETF to avoid: The iShares Dow Jones US Health Care ETF (NYSE:IHF), which counts several hospital stocks among its major holdings.
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