Top ETFs to Benefit From Trump Second Presidency
The former U.S. president's re-election economic plan sheds light on the sector and thematic ETFs poised to benefit under his potential second term.
As the U.S. Presidential Election draws near, the actions and agendas of politicians, including former President Donald Trump, are poised to shape the economic landscape. Trump's recently unveiled economic agenda offers a glimpse into the sectors of the U.S. economy that may become focal points under his potential administration. For investors, understanding these priorities can provide strategic opportunities to adjust their portfolios in alignment with the anticipated policy directions.
Candidate Trump’s Economic Agenda
The renowned French writer and philosopher Voltaire stated, “History never repeats itself, but man always does.” This truism applies to the former president’s current economic agenda, as the economic themes that defined his first presidential term, namely, corporate tax cuts, trade protectionism, and reducing government regulation, are focal points once more.
As detailed in the 2024 Republican Platform pamphlet and summarized in a report published by the Peterson Institute for International Economics, an American think tank based in Washington, D.C., Trump wants to lower the corporate tax rate to 15%. It is worth noting that under his presidency, the Tax Cuts and Jobs Act (TCJA) was enacted, overhauling the tax code and lowering the corporate tax rate to 21% from 35%.
As he has consistently stated, Trump’s “American First” agenda emphasizes instituting tariffs on foreign-made goods and reinvigorating the nation's manufacturing capabilities. Furthermore, maintaining a strong military is also deemed necessary for bolstering the nation’s standing.
ETFs To Consider Under a Trump Administration
In the long run, Trump’s economic agenda is considered inflationary due to the reduction of corporate taxes and implementation of tariffs (i.e., taxes) on foreign goods entering the U.S. Research published by the Tax Foundation, an international research think tank based in Washington, D.C. that collects data and publishes research studies on U.S. tax policies at both the federal and state levels, found that the Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products valued at approximately $380 billion in 2018 and 2019, amounting to one of the largest tax increases in decades.
If the economic environment has the potential to be inflationary, exposure to precious metals such as gold or silver would be advantageous to investors. Gold and silver's value proposition for investors is their ability to protect against inflation, volatility, and geopolitical uncertainty. ETFs, such as iShares Gold Bullion ETF (Ticker: CGL), Purpose Gold Bullion Fund ETF (KILO/ KILO.B/ KILO.U), iShares Silver Bullion ETF (Ticker: SVR/SVR.C), Purpose Silver Bullion Trust ETF (Ticker: SBT/SBT.B), and Horizons Silver ETF (Ticker: HUZ) provide a pathway to gain exposure and profit from the potential rise in the price of these precious metals.
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. Evidence of this was briefly seen in the run-up of U.S. small-cap equities in recent months on the news that President Biden was dropping out of the election, leading many to postulate that former President Trump’s pathway to a second presidential term was assured.
For 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.
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.
A Change in The Regulatory Landscape And Its Investment Implications
A second Trump presidency could potentially lead to material changes in the regulatory landscape, benefiting many large-cap companies in the technology, energy, and financial services sectors. A clear example of this is a recent ruling by a federal judge that found Google illegally maintained a monopoly in online search. The case was the first of several antitrust lawsuits the U.S. government has brought against big tech companies, and the ruling sets a precedent.
A Trump presidency could result in an about-turn regarding anti-trust prosecution, making it a non-issue for many companies and opening the door for consolidation and monopolist behavior. Companies like Amazon, Apple, and Microsoft could maintain their dominance in such a scenario. ETF solutions such as the RBC Global Technology Fund (Ticker: RTEC) or TD Global Technology Leaders ETF (Ticker: TEC) that provide broad exposure to technology firms, particularly the Magnificent Seven, could be worth considering for investors.
Takeaway
Though the political posturing of former U.S. President Donald Trump is often underestimated, the political decisions he made during his first term and their ensuing economic results demonstrate his willingness to move forward with his agenda despite how unpopular it may be.
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.
