With U.S. elections done, investors now can consider the impact of the coming administration’s policies. Should a new Trump administration implement wide-ranging tariffs, it would have similarly broad implications for the U.S. economy. Many firms would likely face increased supply costs cutting into their bottom lines. What’s more, specifically-targeted tariffs, aimed at sectors like chips, could impact important segments like tech. In that case, a quality investing approach could help investors prepare.
See more: Don’t Ignore the Potential of Quality Dividend Investing
Looming tariffs could see sharp cost increases for tech, with the administration interested in specifically targeting chips. That would impact not only imports from firms like Taiwan Semiconductor (TSM) but also U.S. tech companies that use those chips. Other tariffs look set to cover broader imports, impacting big-box stores and similar retailers.
While painful on the supply end, those tariffs could benefit some other sectors. However, it may be worth looking at firms prepared for possible dislocation. A quality investing ETF can help identify firms with healthier internal outlooks.
The ALPS O’Shares U.S. Quality Dividend ETF (OUSA), which charges 48 basis points, presents an appealing option therein. OUSA applies a factor-based, high dividend yield approach to large-cap names. The quality investing ETF screens 500 of the largest U.S. names weighted by low volatility, dividend quality, dividend yield, and quality.
Those factors could help the ETF’s portfolio outperform if tariffs throw markets for a whirl. At the same time, it weights sectors at 22% annually, with a 5% cap on each security. Over the last year, the fund has returned 30.9% per its NAV, beating its benchmark. Quality firms may be better poised to handle a tumultuous economy. Taken together, that could make it a fund to watch.
VettaFi LLC (“VettaFi”) is the index provider for OUSA, for which it receives an index licensing fee. However, OUSA is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OUSA.
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