Top 10 ETFs Since Trump's Surprise Victory

The post-election rally in the U.S. stok market has been nothing short of spectacular. In the month since Donald Trump's victory, all of the major equity benchmarks soared. The S&P 500 hit a record high of 2,260 on Friday, pushing the year-to-date gain for the index up to 12.6%, including dividends.

About half of the market's year-to-date gains came after the election, an unexpected and pleasant surprise for investors who had feared that a Trump win at the polls would spell bad news for equities. Instead, investors quickly realized that a Trump presidency, along with a Republican-controlled Congress, could actually be a boon for stocks.

The threat of higher potential trade barriers was more than offset by hopes of lower taxes, fewer regulations, and fiscal stimulus from infrastructure spending. Most stocks are expected to benefit from Trump's policies; though in the month since the election, certain sectors and industries have done better than others.

The broad, large-cap SPDR S&P 500 ETF (SPY) rallied 5.8% since Nov. 8. That's impressive, but nothing compared with some other ETFs. Take the Guggenheim S&P Smallcap 600 Pure Value ETF (RZV); its focus on small-cap value stocks resulted in a 26.2% post-election return (small-caps in general, thanks to their greater focus on the domestic economy compared to large-caps, have been outperforming since Trump won the election).

RZV is the 10th-best-performing ETF since the election. That means another nine ETFs have done even better since Nov. 8. Here they are:

Jump In Oil & Gas Prices Power Energy ETFs

At the top of the heap for post-election returns is the United States Natural Gas Fund (UNG). However, its 34.4% gain has less to do with the election results than the cold start to the winter the United States has seen.

As the primary heating fuel for most U.S. households, a chilly start to winter translates into higher demand and higher prices for natural gas. UNG, which tracks front-month natural gas futures, is a direct beneficiary of the colder temperatures.

Other than UNG, there are another three energy-related ETFs with gains of more than 26% since Nov. 8. In that period, the SPDR S&P Oil & Gas Equipment & Services ETF (XES) rose by 33.3%; the PowerShares S&P SmallCap Energy Portfolio (PSCE) rallied 28.4%; and the PowerShares Dynamic Oil & Gas Services Portfolio (PXJ) climbed 26.9%.

President-elect Trump has promised to be a friend of the energy industry and will likely reduce regulations for the industry, making it easier to drill for oil and gas in the United States. That being said, the biggest catalyst for the sector's outperformance in the past month isn't Trump but the surge in natural gas and oil prices.

As natural gas spiked to two-year highs due to a cold start to winter, oil soared to a 1 1/2-year high of its own on the back of an OPEC-orchestrated production cut. That translates into chunkier profits for energy companies.

Less Onerous Regulations To Aid Banks

Aside from energy ETFs, the other area to see hefty returns since the elections is financials. A total of five financials-related ETFs made the post-election top 10, including the PowerShares KBW Regional Banking Portfolio (KBWR), with its 28.4% gain.

Banks are expected to do well under president Trump thanks to reduced regulations. Banks that aren't seen as "too big to fail," such as regional banks, may be some of the biggest beneficiaries of a less onerous regulatory environment.

The spike in interest rates―the benchmark U.S. 10-year Treasury yield increased from 1.85% before election to 2.5% today―also aids the profitability of banks.

The First Trust Nasdaq ABA Community Bank Index (QABA), with a 28.4% gain; the SPDR S&P Regional Banking ETF (KRE), with a 27.4% return; and the broader SPDR S&P Bank ETF (KBE), with a 26.2% increase, were other banking names to make the top 10 post-election list.

Post-Election Returns (Nov. 8 through Dec. 9)

Contact Sumit Roy at [email protected]