Winning ETF Areas After First Presidential Debate

Sweta Jaiswal, FRM
·5-min read

The world’s largest economy is on track for the most unusual presidential elections this year as the coronavirus pandemic continues to wreak havoc. The first of the three debates concluded in Cleveland. Experts have been describing the debate as raucous, fiery, chaotic and brutal. President Trump came out to be aggressive and offensive in the 90-minute debate with Mr. Joe Biden, the Democratic presidential candidate, coming out to be more poised and calm, per the sources.

Following the debate, the wind seems to be flowing in favor of Biden.  According to data from Smarkets, Biden’s chances of winning are now pegged at 62%, while odds in favor of Trump are at 38%, per a Yahoo Finance article. Going on, data from U.K.-based Oddschecker reflects that Biden’s chances of winning have risen to more than 58% while Trump’s have declined to around 42%, according to the same Yahoo Finance article.

In such a political scenario, let’s look at the ETF areas that have been benefitting following the debate:

Clean Energy ETFs

The clean or green energy space has been a hot discussion topic in the ongoing U.S. election campaign. Investors showed optimism as the Invesco Solar ETF TAN surged 3.6%, also hitting its all-time high on Sep 30. Moreover, the Invesco WilderHill Clean Energy ETF PBW rose 2.2% during the day’s trading session.

Biden has been strongly campaigning for his clean energy and infrastructural plans. He aims to pump $2 trillion into green energy over four years to build solar panels, charging stations, etc. Under his tenure, Biden plans to build numerous wind turbines and solar panels to rapidly achieve zero-carbon energy. The plan will eliminate toxic emissions from the power grid by 2035 and increase the utilization of electric vehicles (read: Beyond Clean Energy, 5 Best Global ETF Areas of Q3).

China ETFs

Experts believe Biden’s advisers consider China as a threat to America’s supremacy in technology and as a global power. Nonetheless, the ground on which Biden’s approach is going to be different than Trump’s will be ‘diplomacy’. Biden plans to work along with allies like Japan and Europe to build pressure on China in order to impose market-friendly trade practices and reform some World Trade Organisation rules, per a CNBC article. Going by The Wall Street Journal article, Biden has expressed interest in working along with China on some global concerns like the coronavirus pandemic and climate change.

Thus, some China ETFs like iShares MSCI China ETF MCHI, iShares China Large-Cap ETF FXI and SPDR S&P China ETF (GXC) rose more than 2% on Sep 30 (read: What Does a Biden Win Mean for China ETFs?).

Big Tech ETFs

Experts believe that the technology sector might get a more conducive environment under the Biden administration.Yesterday, Fidelity MSCI Information Technology Index ETF FTEC rose 0.8%. Biden wants social media companies to more actively and responsibly take down content that can be spreading rumours and false information, per The Wall Street Journal article. Also, Biden is believed to work on policies that will enhance the accountability and transparency of major technological companies instead of breaking up business units, per a S&P Global Market Intelligence article.

Experts believe that the Biden administration will relax immigrations policies to some extent to allow high-skilled foreign nationals to get recruited by big techs. At the same time, Biden will try to balance out the impact of the move on the employment environment and wages in the United States, per the sources.

Against this backdrop, investors seeking to gain exposure to the big techs could also consider ETFs like Vanguard Information Technology ETF VGT, The Technology Select Sector SPDR Fund XLK and iShares U.S. Technology ETF (IYW) (read: 5 Top-Ranked Technology ETFs Worth a Bet Now).

Consumer Discretionary ETFs

Biden wants to raise the federal minimum wage to $15 along with creating jobs through infrastructure investments. The policy is raising optimism as it can benefit the consumer discretionary sector, which attracts a major portion of consumer spending. In fact, the Fidelity MSCI Consumer Discretionary Index ETF FDIS rose 0.9% in yesterday’s trading session with Vanguard Consumer Discretionary ETF VCR and The Consumer Discretionary Select Sector SPDR Fund (XLY) rising 0.8% (read: A Biden Presidency in the Making? ETF Strategies to Follow).

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Technology Select Sector SPDR ETF (XLK): ETF Research Reports
 
iShares MSCI China ETF (MCHI): ETF Research Reports
 
iShares China LargeCap ETF (FXI): ETF Research Reports
 
Invesco Solar ETF (TAN): ETF Research Reports
 
Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports
 
Invesco WilderHill Clean Energy ETF (PBW): ETF Research Reports
 
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
 
Vanguard Information Technology ETF (VGT): ETF Research Reports
 
Fidelity MSCI Consumer Discretionary Index ETF (FDIS): ETF Research Reports
 
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