3 ETF ‘Trump Trades’ That Tripped

July 19, 2017

When it comes to investing, the problem with a sure thing is that no one can really be sure where the market will go.

A look at some of the sure-thing, conventional-wisdom Trump trades following last November’s U.S. presidential election is a humbling reminder that crystal balls aren’t crystal clear, and investors can often be caught on the wrong side of a trade.

Bet On Rising US Dollar

The U.S. dollar was heralded as the big beneficiary of the incoming Trump administration. A business-friendly president determined to “make America great again” could mean only one thing for the greenback: upside. The dollar likes a growing economy.

But seven months into the year, the dollar is not only lower, it’s at its lowest level since last summer. It’s down some 8% since its early January multiyear highs.

Among the things weighing on the dollar is eroding investor confidence in President Trump’s ability to spur economic growth. His administration is struggling to pass promised legislation, such as a health care bill and tax reform. Seven months in, blockbuster growth isn’t such a given. 

In ETF terms, that performance can be seen in a fund like the PowerShares DB US Dollar Index Bullish Fund (UUP), the biggest dollar-tracking ETF, with $545 million in assets.

The fund goes long the U.S. dollar and shorts the currencies of major U.S. trading partners. The portfolio should go up when the dollar goes up. In 2017, UUP has slid nearly as much as the dollar, and investors have now yanked some $265 million from the fund this year.



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