With 2024 being an election year, much attention has been paid to the candidates’ and parties’ platforms for bringing more manufacturing jobs back to the U.S. Also known as reshoring, the movement garnered new attention when the COVID-19 punished global supply chains.
It’s a point of emphasis for both parties. And as the reshoring movement continues gaining momentum, related investment implications could follow suit. Perhaps surprising to some investors, the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) are among the ETFs that could benefit from sustained reshoring.
The Invesco ETFs have a bit of exposure to industrial stocks. But that doesn’t diminish the funds’ leverage to reshoring. Actually, QQQ and QQQM have ample credibility as reshoring plays. That’s because the depth of the U.S. technology space is supporting reshoring.
Tech at Epicenter of Reshoring
The lead possessed by U.S. — one driven in large part by many QQQ/QQQM holdings — areas such as AI, automation and robotics is one of the driving forces behind reshoring and among the principal reasons these ETFs have legitimate ties to the effort to bring more jobs back to the U.S.
“Who are the direct beneficiaries? High-tech sectors, such as semiconductors, pharmaceuticals, and advanced manufacturing systems, are likely to be the biggest winners. Traditional industrial sectors, such as automotive and aerospace, are also seeing a resurgence,” noted Chris Snyder, Morgan Stanley’s U.S. multi-industry analyst.
He added that companies investing in sustainable manufacturing plans are also likely to benefit from reshoring. That point could prove relevant to QQQ/QQQM investors because many of the tech companies residing in the ETF prioritize sustainability, possessing the products and services to help clients add more efficiencies and sustainability in their production processes.
That focus on sustainability is also pertinent at a time when more state and local governments are embracing climate-related regulations. Firms focusing on sustainability could encounter less red tape and more durable supply chains. Looking further out, reshoring is vital and has investment implications because it could be additive to U.S. economic growth. And that would support enhanced importance to QQQ/QQQM investors.
“We think the implications are pretty profound. In altering the US industrial landscape, reshoring promises not only to boost GDP growth, but it could also stabilize and potentially reverse the trade deficits that have plagued the US economy for years,” added Morgan Stanley’s Snyder.
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