In the months after his inauguration, President Donald Trump and his administration have hit the ground running, setting the tone for the next four years with a swift series of executive actions. While it’s unclear how some issues — most notably health care — will find life in policy, in other issues Trump’s intent is clear as a bell.
With a good idea of where the administration will guide, directly or indirectly, a number of different industries, investors have a number of different ways to invest accordingly.
Investors looking to “go long Trump” have many options, including a group of exchange-traded funds that hold the companies likeliest to succeed as a result of some of the stances the president has taken. Here’s a look at nine potential winners.
[See: The 25 Best Blue-Chip Stocks to Buy for 2017.]
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 are 0.44 percent, or $44 annually per $10,000 invested.
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.” Trump signed an executive order in March aiming to do just that, rolling back climate regulations that would have hastened the shuttering of hundreds of coal plants.
That’s good news for 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 27 percent. KOL holds numerous indirect plays, too, such as heavy machinery manufacturer Joy Global ( JOY). Expenses are 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 bath water during energy’s massive sell-off 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 roughly 7 percent and doesn’t require filling out K-1 statements. Expenses are 0.85 percent.
PowerShares Aerospace & Defense Portfolio ETF (PPA). Another prominent issue on the Whitehouse.gov website is “Making Our Military Strong Again” — and it didn’t take long for that platform to be emphatically emphasized through action. The Trump Administration’s proposed fiscal 2018 budget increases military spending by $54 billion, or roughly 10 percent, a massive year-over-year increase.
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 are 0.64 percent.
[Read: The 10 Most Anticipated IPOs of 2017.]
Vanguard Consumer Discretionary ETF (VCR). According to Treasury Secretary Steven Mnuchin, tax reform is coming to America in 2017 — despite the legislative setback that materialized with the failure to repeal Obamacare, 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 had more cash in their pockets. Moreover, VCR is a dirt-cheap option, sporting an expense ratio of just 10 basis points. Expenses are 0.1 percent.
PowerShares Dynamic Building & Construction Portfolio ETF (PKB). While Trump’s widely touted infrastructure plan hasn’t yet been hogging the spotlight, 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 like Jacobs Engineering Group ( JEC).
But fair warning: This became a crowded trade immediately after the election, and many industrial plays have started working off froth after the initial bull surge. If Trump’s infrastructure plan ends up being less than anticipated, PKB and its constituent companies could be at risk. Expenses are 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 are 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. For example, three of SPHD’s top 10 holdings are Iron Mountain ( IRM), Phillip Morris International ( PM) and Ford Motor Co. ( F), stocks that sport dividend yields between 3 percent and 7 percent. Expenses are 0.3 percent.
[See: 7 of the Best Stocks to Buy for 2017.]
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 are 0.25 percent.
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9 of the Best ETFs to Buy for Trump’s Presidency originally appeared on usnews.com
