Trump Trade, Harris Trade or Just an ETF Trade?

In a little over three months, Americans choose a new president—and the financial world will be watching.  

As the outcome clarifies swirling economic and market questions, investors will watch for new opportunities beyond U.S. borders. Those opportunities will be available in the form of ETFs that track the index of stocks from a single country. There are well over 100 of them, representing scores of individual countries. 

Here’s a quick tour of some possibilities, with an emphasis on those nations whose relationship with the U.S. will be impacted based on how the top job and any shifts in the makeup of Congress develop.

Country ETFs to Watch Post-Election

U.S. energy policy seems to always be on the ballot, and the two main political parties disagree in many ways regarding the right balance of fossil fuel and alternative sources. That means that single country ETFs representing oil-rich nations will probably be affected by what happens in November. Saudi Arabia would be an obvious spot to look.  

However, that nation’s oil supply is largely controlled by the government, not public companies. The same is true for many other Arab nations. So instead, ETFs like the $50 million MSCI Norway ETF (NORW), with its 30% allocation to the energy sector and 5.2% dividend yield offer another place to drill for profits.

And with the U.S.-NATO alliance potentially on the ballot, ETFs like the $325 million SPDR Portfolio Europe (SPEU), which also sports a nice 3% yield. SPEU is one a handful of pure play ETFs on that continent’s equity markets, the majority of which are NATO members.

China, Mexico ETFs May to React to Election

And then there’s China. While Russia seems to draw stark differences in opinion from different sides of the aisle, both parties have a beef with China, albeit different varieties of concerns. 

That's where ETFs can be useful, since investors and advisors can take either side of that “trade.” There are broad based China ETFs galore, but also niche types such as the $197 million Global X MSCI China Consumer Disc ETF (CHIQ). And for those who aim to succeed when China’s stock market falls, the little-known ProShares Short FTSE China 50 (YXI), at $7 million in assets, gained 55% from February through October of 2022, when the S&P 500 fell 13%.  

And of course, no discussion of the US Presidential Election, or US politics in general these days, is complete without a discussion of our southern border neighbor, Mexico. The $80 million Franklin FTSE Mexico ETF (FLMX) covers that country’s equity market, which leans heavily on consumer staples and financial companies.  

Clearly, the election will have ripple effects well beyond U.S. borders. And ETFs help investors to “play politics” in a way that can directly benefit their portfolios.