Lastly, Chaikin contended pointed out that the lower corporate tax rate will support many financial companies, especially since financial earnings are mostly domestic and the new tax rules largely affect earnings at home.
“Many companies will benefit from the lower tax rates, which will improve net earnings. Some of the biggest beneficiaries are in the Financial sector,” Chaikin said.
IndexIQ and Chaikin Analytics recently followed up on the popular smart beta play, IQ Chaikin U.S. Small Cap ETF (NasdaqGM: CSML), with the launch of large-cap version tracking the same smart beta Chaikin Power Gauge strategy, the IQ Chaikin U.S. Large Cap ETF (NasdaqGM: CLRG).
The underlying index takes 45 to 65 components from the market cap-weighted Nasdaq US 300 and incorporates the so-called Chaikin Power Gauge that combines four primary factors, including value, growth, technical and sentiment. CSML includes a hefty 27.1% tilt toward financials while CLRG also has a big 39.9% weight in the financial sector.
Investors who are interested in making a targeted overweight position in financials have a number of sector-specific ETFs to choose from as well, including the Financial Select Sector SPDR (NYSEArca: XLF), Fidelity MSCI Financials Index ETF (NYSEArca: FNCL), iShares U.S. Financials ETF (NYSEArca: IYF) and Vanguard Financials ETF (NYSEArca: VFH), among others.