Does Your ETF Portfolio Need A Trump Transformation?

Everywhere you look now, someone has an opinion about the direction of the markets under a Trump presidency. There is speculation on everything from the impact of his trade policies to the potential of further deficit spending and legislative changes. These factors have coalesced to send many sectors of the stock and bond markets into a tizzy as investors grapple for positioning. 

The table below illustrates some of the biggest movers in the ETF universe since the Wednesday following the election. Many of these sectors tend to be favorites among institutional portfolios and large traders that want gross exposure in a hurry. They are diversified, liquid, and mostly cheap to own.

Ticker Name %Change
QQQ PowerShares QQQ -0.23%
IWM iShares Russell 2000 ETF 8.91%
EEM iShares Emerging Market ETF -7.63%
XLF Financial Select Sector SPDR 9.38%
KRE SPDR Regional Bank ETF 14.46%
IBB iShares NASDAQ Biotech ETF 11.04%
GLD SPDR Gold Shares ETF -4.04%
HYG iShares High Yield Corp Bond ETF -1.33%
TLT iShares 20+ Yr Treasury Bond ETF -5.90%
*Data from (11/09/16 – 11/16/16)  

There are some obvious standouts in this list that are worth noting.The growth engines have shifted from large cap tech (QQQ) to small cap stocks (IWM). Banks (KRE) and financial stocks (XLF) are viewed as a strong bet if legislative restrictions are loosened and interest rates continue higher (TLT). Biotech (IBB) got the sigh of relief that Hillary wasn’t going to clamp down.

The most important thing to realize is that all this repositioning has occurred in a very short period. It doesn’t necessarily mean that these trends will continue indefinitely or even completely reverse course in due time. Anyone who guarantees this is the new “playbook” for the next four years is optimistically staring into a crystal ball or taking too much crystal meth.

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Disclosure: None.

The views and opinions expressed herein are the views and opinions of the author and do not ...

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Chee Hin Teh 3 years ago Member's comment

thanks for sharing