Consumer-Driven ETF Won't Feel Much Election Impact | ETF Trends

As Election Day 2020 draws closer, it’s common for market participants to discuss various outcomes and how those outcomes could impact sectors.

It’s not uncommon to hear talk about potential impacts on consumer spending and trickle-down effects on ETFs, such as the Principal Millennials Index ETF (Nasdaq: GENY), but some market observers believe consumer spending won’t be derailed regardless of the Nov. 3 scenario.

“The U.S. presidential election in November is expected to have a minor impact on consumer discretionary spending over the next three months but the coronavirus crisis continues to weigh heavily on people’s minds and purchasing decisions, according to a new survey by 451 Research,” reports S&P Global Market Intelligence.

GENY tracks the Nasdaq Global Millennial Opportunity Index. This index seeks to capture the global spending and lifestyle activities of the largest generation ever, offering exposure to brand name companies specializing in social media, digital media, technology, healthy lifestyles, travel, and leisure. The companies will evolve over time as the spending patterns of millennials change as they age.

Politics Aside, GENY Is Durable

With the U.S. economy showing some signs of life and with the holiday shopping season not far, considering consumer cyclical stocks over the near-term could be a winning idea.

Recent data points indicate there are opportunities in the consumer discretionary and housing sectors. The sector is one offering investors more gains. Recent performers that stood out have also been those that were previously hardest hit by the coronavirus-driven fallout in the markets.

“Nearly 75% of survey respondents said the Nov. 3 election would have no impact on their spending for the next 90 days. But looking at the remainder of the respondent pool, more people expect to cut back spending rather than spend more as the critical holiday season kicks into full swing. The proportion of consumers expecting to decrease their spending in the coming months due to the election was 16.4%, more than three times the number of consumers who said they intend to spend more, which came in at 4.5%,” according to S&P Global.

Integral parts of the Gen Z-related investment thesis are shopping and entertainment consumption trends. Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through ETFs that target the e-commerce segment.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.