ETFs To Watch Under Trump’s Presidency
Canadian investors should keep an eye on inflation-protective assets and sectors aligned with Trump’s policies, like small-caps, defense, and crypto ETFs.
America has spoken, and former President Donald Trump will again occupy the Oval Office for a second term. Though the political posturing of President-elect Donald Trump is often underestimated, his political decisions during his first term and their ensuing economic results demonstrate his willingness to move forward with his agenda despite how unpopular it may be. Therefore, as investors, the most practical course of action is to assume that he will work towards fulfilling the tenets of his economic policy, and one must be mindful of the potential implications of said actions.
President Trump’s Economic Policy Summarized
Like his first presidential term, Trump’s economic focal points are corporate tax cuts, trade protectionism, and reducing government regulation. As he has consistently stated, his “American First” agenda emphasizes instituting tariffs on foreign-made goods and reinvigorating the nation’s manufacturing capabilities. Additionally, ensuring the U.S. military maintains its standing globally is considered a priority.
ETFs To Consider Under a Trump Administration
As noted by Trump, restoring America’s manufacturing capabilities is of great importance; as such, it can be hypothesized that U.S. small and mid-cap companies would greatly benefit from his economic agenda. Furthermore, with the market anticipating further rate cuts within the year, U.S. small and mid-cap companies would benefit in the short run from the changes occurring in the economic environment.
For Canadian investors seeking exposure to U.S. small-cap equities, should a second Trump presidency occur, the AGF U.S. Small-Mid Cap Fund (Ticker: ASMD), BMO S&P US Small Cap Index ETF (Ticker: ZSML/ZSML.F), iShares U.S. Small Cap Index ETF (CAD-Hedged) (Ticker: XSU), and iShares S&P U.S. Small-Cap Index ETF (Ticker: XSMC/XSMH) are worthy of consideration.
Regarding changes in the regulatory environment, this could have far-reaching implications benefiting many large-cap companies in the technology, energy, and financial services sectors. Upon the announcement of President-elect Trump’s return to the White House, Bitcoin has rallied to a new high, as many believe his administration will be supportive of cryptocurrencies, given his proclamations during his campaigning. In such a scenario, cryptocurrency ETFs, such as the Purpose Bitcoin ETF (Ticker: BTCC/BTCC.B/BTCC.U) and Evolve Bitcoin ETF (Ticker: EBIT/EBIT.U) are poised to benefit.
Finally, the focus on a strong military alludes to continued spending on national defense. As highlighted in a previous article, the U.S. government outspends at least a dozen other nations in military expenditures, which is expected to continue under a Trump presidency. As such, the iShares U.S. Aerospace & Defense Index ETF (Ticker: XAD), which is designed to track U.S. companies’ performance in the aerospace and defense sector, is a solution that should be considered.
Takeaway
The presidency of Donald Trump has made it clear that his rhetoric should be taken seriously; as such, it is prudent for investors to understand the literal implications of his actions and how they can shape the economic landscape as we advance.
Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
