Next week, America will go to the polls to decide who will sit in the White House the next four years. Some traders have been making bets on the outcome of the presidential election with sector ETFs, liquid funds that give investors exposure to entire industries with one trade.
The winner — Obama or Romney — will likely have consequences for many sector ETFs, including healthcare and energy, to name a few.
Many market watchers believe that the alternative energy sector could benefit from Obama’s second term, writes John Nyaradi for MarketWatch. [Sector ETF Opportunities Going Into 2013]
ETF investors can gain access to broad alternative energy providers or focus on specific sub-industries, like solar or wind energy producers, he reports:
- iShares S&P Global Clean Energy Index Fund (NYSEArca: ICLN)
- Market Vectors Global Alternative Energy ETF (NYSEArca: GEX)
- PowerShares WilderHill Progressive Energy Portfolio Fund (NYSEArca: PUW)
- PowerShares WilderHill Green Energy ETF (NYSEArca: PBW)
- First Trust ISE Global Wind Energy ETF (NYSEArca: FAN)
- PowerShares Global Wind Energy Portfolio ETF (NYSEArca: PWND)
- Guggenheim Solar ETF (NYSEArca: TAN)
- Market Vectors Solar Energy ETF (NYSEArca: KWT)
On the other hand, if Romney gets elected, analysts believe coal and oil industries would benefit. [Coal ETFs Are Beginning to Fire Up]
Investors can gain direct energy exposure through commodity ETFs:
- USCommodity Oil Fund ETF (NYSEArca: USO)
- USCommodity Brent Oil Fund LP ETF (NYSEArca: BNO)
- Teucrium Crude Oil Fund ETF (NYSEArca: CRUD)
Additionally, oil and gas services and exploration sector options include:
- SPDR S&P Oil & Gas Equipment & Services ETF (NYSEArca: XES)
- SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP)
- iShares Dow Jones U.S. Oil Equipment & Services Index Fund ETF (NYSEArca: IEZ)
- iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund ETF (NYSEArca: IEO)
While there are no direct plays on coal futures, investors can gain exposure to the coal industry through coal stock ETFs:
If Obama’s Affordable Health Care reform goes into full effect, the health care industry will add millions of new insured clients. [Election Could Make or Break Health Care ETFs]
- Health Care Select Sector SPDR ETF (NYSEArca: XLV)
- Vanguard Health Care Index Fund (NYSEArca: VHT)
- iShares Dow Jones US Health Care Providers Index Fund (NYSEArca: IHF)
Romney has stated that he would repeal the Medical Device Tax. Medical devices ETFs that would benefit include:
- iShares Dow Jones Medical Device Index Fund (NYSEArca: IHI)
- SPDR S&P Health Care Equipment ETF (NYSEArca: XHE)
If elected, Romney would also boost defense spending to bolster America’s military prowess.
- iShares Dow Jones US Aerospace and Defense Index Fund (NYSEArca: ITA)
- PowerShares Aerospace Defense and Defense Portfolio Fund (NYSEArca: PPA)
President Obama has also promised to put more into infrastructure spending. Domestic infrastructure ETFs include:
- First Trust North American Energy Infrastructure ETF (NYSEArca: EMLP)
- PowerShares Dynamic Building and Construction ETF (NYSEArca: PKB)
For more information on market sectors, visit our sector ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.