Invest in Trump’s agenda with ETFs.
President Donald Trump is moved into the White House, and his administration is already at work setting the tone for the next four years. Complementing months of campaign promises is a revamped WhiteHouse.gov site, including a number of issues that show just where policy initiatives will be focused as the president begins to make his mark on the country. Investors looking to “go long Trump” have a number of options at their disposal, including a group of exchange-traded funds that hold the companies likeliest to succeed as a result of some of the pledges the president has made. Here’s a look at nine potential winners.
iShares U.S. Energy ETF (ticker: IYE)
At the top of WhiteHouse.gov’s Issues section is “An America First Energy Plan.” Granted, you can thank alphabetical order for that, but still, energy investors have to be heartened that Trump is focused on unlocking America’s “vast untapped domestic energy reserves.” Few ETFs will benefit more than the IYE — a collection of 71 U.S. companies that deal in various links of the energy chain. Integrated oil and gas companies such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) make up 40 percent of the fund, exploration and production holdings are a little more than a quarter, and equipment and services are 16 percent.
Expenses: 0.44 percent
VanEck Vectors Coal ETF (KOL)
Another key passage in the America First Energy Plan description: “The Trump Administration is also committed to clean coal technology, and to reviving America’s coal industry, which has been hurting for too long.” If Trump can re-expand the use of coal, this would jump-start many of the companies in the KOL — a 28-stock industry fund of coal-related companies. Of note, while this includes American companies like Consol Energy (CNX), Chinese companies such as China Shenhua Energy make up the largest clump of holdings, at 25 percent. KOL holds numerous indirect plays, too, such as heavy machinery manufacturer Joy Global (JOY).
Expenses: 0.59 percent
JPMorgan Alerian MLP Index ETN (AMJ)
Energy master limited partnerships — some of whose revenues aren’t even reliant on the price of energy, but simply how much they store and transport — were thrown out with the bathwater during energy’s massive selloff from 2014 through the beginning of 2016. Similarly, though, MLP prices are improving as oil prices stabilize and climb higher. AMJ is not an ETF, but an exchange-traded note — essentially, just bank debt that replicates the performance of an index. AMJ’s MLP index includes companies such as Enterprise Products Partners LP (EPD) and Energy Transfer Partners LP (ETP), yields nearly 7 percent and doesn’t require filling out K-1 statements.
Expenses: 0.45 percent
PowerShares Aerospace & Defense Portfolio ETF (PPA)
Another issue at the top of Trump’s list is “Making Our Military Strong Again,” with the White House saying, “President Trump will end the defense sequester and submit a new budget to Congress outlining a plan to rebuild our military. We will provide our military leaders with the means to plan for our future defense needs.” PowerShares’ PPA holds a basket of 50 companies that will benefit from a pro-military stance, including the likes of Lockheed Martin Corp. (LMT) and General Dynamics Corp. (GD), and even cybersecurity stocks like FireEye (FEYE).
Expenses: 0.64 percent
Vanguard Consumer Discretionary ETF (VCR)
While Trump’s own Treasury secretary nominee questioned the viability of the tax reforms touted by the president on the campaign trail, we can expect a push toward tax cuts of some type — and that means good things for consumer spending. Vanguard’s VCR ETF is one of several funds dedicated to discretionary companies such as Amazon.com (AMZN), Home Depot (HD) and Walt Disney Co. (DIS) — exactly the types of businesses you would expect people to patronize if they have more cash in their pockets. Moreover, VCR is a dirt-cheap option.
Expenses: 0.1 percent
PowerShares Dynamic Building & Construction Portfolio ETF (PKB)
While Trump’s widely touted infrastructure plan only received side mentions, many still believe a big public infrastructure spend is in the cards. While several ETFs could tangentially benefit, the PKB is the most direct play, boasting materials suppliers like Martin Marietta Materials (MLM) and Vulcan Materials Co. (VMC), and engineering firms such as Jacobs Engineering Group (JEC). But fair warning: This became a crowded trade immediately after the election, and many industrial plays are now working off froth after the initial bull surge. If Trump’s infrastructure plan ends up being less than thought, PKB and its constituent companies could be at risk.
Expenses: 0.63 percent
Guggenheim S&P 500 Equal Weight Industrials ETF (RGI)
The RGI is an interesting consideration as it seems to address a few Trump initiatives, including previously mentioned defense and infrastructure, but also a pledge to bring back jobs and “support U.S. manufacturing.” The RGI is an equal-weight fund that holds Standard & Poor’s 500 index industrial stocks — including a 20 percent weight in machinery, 16 percent in aerospace and defense, 9 percent in road and rail companies, and solid weights in commercial services and supplies, industrial conglomerates and building products. If there’s a “total” Trump fund, RGI might be it.
Expenses: 0.4 percent
PowerShares S&P 500 High Dividend Low Volatility Portfolio (SPHD)
Not everyone believes Trump will be able to keep this aging bull market going, and in fact, the president has shown an uncanny ability to disrupt individual companies, sectors and even currencies with a tweet or two. So another option during the Trump presidency might be to hunker down for a volatile four years in a fund like PowerShares’ SPHD, which puts an emphasis on holding stocks with lower volatility and higher yields. While SPHD includes the likes of People’s United Financial (PBCT) and International Paper Co. (IP), the yield-weighted methodology has Trump target General Motors Co. (GM) as the top holding.
Expenses: 0.3 percent
iShares Gold Trust (IAU)
Trump made fast friends with the gold crowd by lashing out at the strength of the U.S. dollar, which if it became an administration stance would reverse decades of American policy. It would also mean great things for gold and other commodities, which are priced in relation to the U.S. dollar. While there are a few ways to invest directly in physical gold, the IAU is one of the largest by assets and extremely liquid, and it costs 15 basis points less than America’s No. 1 gold fund, the SPDR Gold Shares (GLD). Best of all, this doubles as a safe-haven play in a volatile market.
Expenses: 0.25 percent
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The 9 Best ETFs to Buy Under President Donald Trump originally appeared on usnews.com
