Top ETF Picks Now That Trump Is President

January 23, 2017

Political change is in the air, as President Donald Trump took office this month. His administration, elected on a platform of change, is expected to shake things up, and markets will react accordingly.

To ETF strategists making crucial asset allocation decisions, a new administration means re-evaluating some sectors, styles and country exposures. Here, seven of them tell us what ETFs or segments they are buying into now that Trump is in office, and why.

Dave Garff, president; Accuvest Investors – Walnut Creek, California

As basic as it sounds, we are looking at the big banks (choosing ETFs like the PowerShares KBW Bank Portfolio (KBWB) as an example, as opposed to the Financial Select Sector SPDR Fund (XLF)) as beneficiaries of decreased regulation from a Trump presidency. We obviously have to be patient, and wait for an opportunity to buy them when they are a little weaker in price.

Ben Doty, senior investment director; Koss Olinger – Gainesville, Florida

As contrarian investors, the relative opportunity in the U.S. is health care as a sector. It not only had negative returns last year, but had negative outflows. All the negative news about Republicans dismantling the Affordable Care Act and Trump’s comments on drug prices have depressed the sector and created uncertainty.

Yet at a trailing P/E of 15.5—possibly the lowest among all S&P sectors—and the third-highest earnings- per-share increases over the next three to five years, a lot of people are ignoring fundamentals. If you’re a value investor, you can’t avoid health care. The pharmaceutical subsector is trading under a P/E of 12.

[The chart below shows the one-year performance of Health Care Select Sector SPDR Fund (XLV) as an example in a segment populated by some 50 ETFs.]


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