2 ETFs are likely to win, be it a Biden or Trump presidency

With less than 24 hours to start, the expectations about the results and the impact on the economy are fully understood.

Last week's run-up to US stocks only adds to the expectation. The uncertainty surrounding the election, as well as questions about the global economic recovery given the resurgence in COVID cases, are key factors in the increase in volatility.

Seasoned investors realize that election volatility is usually related to short-term noise, while well-run companies that generate stable revenues are likely to thrive regardless of party politics.

Research published in 2018 by the Board of the Federal Reserve System examined why the index was higher than the November 2016 through the end of 2017 presidential elections.

Economics professors Olivier Blanchard and Robert M. Solow, who led the study, agreed that more clarity about economic policy boosted markets and explained:

“Just over half the increase in total US stock prices from the presidential election to the end of 2017 can be attributed to higher actual and expected dividends. A general improvement in economic activity and a decrease in uncertainty about economic policy around the world – contrary to what had been predicted before the US elections – were the main drivers behind the stock market rise. "

With this in mind, here's an ETF that is on track to benefit long-term regardless of election results:

SPDR S&P Internet ETF

Current Price : $ 116.86
52 Week Range: $ 53.49 – $ 131.56
Dividend Yield: 1.15%
Expense Ratio: 0.35%

The SPDR® S&P Internet ETF (NYSE 🙂 provides exposure to companies active in Internet services, infrastructure, e-commerce and interactive media. The fund started trading in 2016 and has nearly $ 48 million under management.

XWEB, which has 46 companies, tracks the S&P Internet Select Industry Index. Since no company has a weight greater than 4%, no single stock alone can influence the price of the fund. Nor is it dominated by titans like Alphabet (NASDAQ :), (NASDAQ: ), Amazon (NASDAQ 🙂 or Facebook (NASDAQ: ) .

Some of the top names in the fund include the image sharing and social media platform Pinterest (NYSE 🙂 which recently announced robust third quarter results with 58% revenue at annualized to $ 443 million, multimedia messaging app Snap (NYSE 🙂 with third quarter revenue also 52% to $ 679 million, sales side ad agency Magnite (NASDAQ 🙂 online personal styling service Stitch Fix (NASDAQ 🙂 and e-commerce auto parts supplier Carparts.com (NASDAQ :).

Since the beginning of the year, XWEB is up more than 43%. It hit a record high of $ 131.56 on October 14. Understandably, the trend of staying at home and working from home has thrown many internet companies into the wind.

As a result of the recent price increase, its valuation is extended. The trailing P / E and P / B ratios stand at 37.69 and 5.01. Investors who track short-term technical charts should be aware that several indicators require caution. In the coming weeks, a decline to the USD 110 level or even below seems likely, giving long-term investors a chance to buy the fund.

Bottom Line

Many are understandably nervous about the effects of tomorrow's election on their investment portfolios. However, it is unlikely to have a lasting impact on the businesses of robust companies or secular market trends, so those with diversified portfolios should not be concerned.

Another long-term ETF to consider could be the Invesco S&P 500 Equal Weight Consumer Staples ETF (NYSE 🙂 which provides access to basic consumer goods companies. The sector is generally seen as a defensive game in volatile times. RHS has 32 companies. It has been trading since 2006.

Major names in the fund include Costco Wholesale (NASDAQ 🙂 Colgate-Palmolive (NYSE 🙂 Campbell Soup (NYSE 🙂 Estee Lauder (NYSE 🙂 Conagra Brands (NYSE 🙂 and Walmart (NYSE 🙂 .

In addition to robust US operations, most companies in the fund also have significant exposure to overseas markets. The second wave of the pandemic is triggering another round of lockdowns around the world. Amid this uncertainty, consumer staples companies are expected to perform well. The current 2.2% dividend yield could also be attractive to those looking for passive income.

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