What ETFs to Buy and Avoid During a Hillary Clinton Presidency

hillary-clintonThis weekend’s issue of venerable business magazine Barron’s took an in-depth look at what types of equities would likely thrive and starve if Hillary Clinton becomes president.

According to the article (subscription required), Hillary would be good for certain sectors of the healthcare industry, green energy, and defense. Meanwhile, she’d be bad for pharma, finance, and traditional energy. Here’s a breakdown of Barron’s findings, along with our suggestions on specific ETFs to buy and avoid in the event that Clinton wins the election in November.

Hillary’s Winners

  1. Managed-care and hospitals would probably perform well, because of Clinton’s aim to expand Obamacare. Potential ETF to target: The iShares Dow Jones US Health Care ETF (NYSE:IHF), which counts several hospital stocks among its major holdings.
  2. Alternative energy companies would be attractive with Clinton in the White house. Clinton’s Clean Energy Challenge includes grants and tax incentives for green energy firms, including solar and wind power companies. Potential ETF to target: PowerShares WilderHill Clean Energy ETF (NYSE:PBW), which holds a diversified portfolio of alternative energy companies.
  3. Defense names could also perform well, because Clinton isn’t very shy when it comes to foreign intervention. Defense firms are among her largest donors, and she oversaw several military operations as Secretary of State. Potential ETF to target: iShares Dow Jones US Aerospace & Defense ETF (NYSE:ITA), which holds all of the largest defense contractor stocks.

Hillary’s Losers

  1. Drugmakers, especially biotech, would be a bad investment idea for a Hillary presidency. She’s made it clear she wants to lower drug costs, and has already targeted certain firms with her ire. ETF to avoid: iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB), which has extremely narrow exposure to volatile drug names.
  2. Financial services, including big banks and brokerages, probably wouldn’t perform very well under Clinton. She supports the Consumer Financial Protection Bureau, wants to tax high-frequency trading, and is in favor of a “risk fee” for big banks. ETF to avoid: SPDR KBW Bank ETF (NYSE:KBE), which specifically targets large-cap U.S. banks.
  3. Fossil fuel companies would likely perform very badly with Clinton as president. She does not support coal mining on federal land, and is opposed to offshore oil drilling. ETF to avoid: Energy Select Sector SPDR ETF (NYSE:XLE), which counts Exxon and Chevron amongst its largest holdings.
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