ETFs
3 ETFs that could benefit from a Trump presidency
With election season underway, it’s a good time to think about industries and ETFs that could benefit from a Trump presidency if the former president wins the election. The purpose of this article is not to predict the outcome of the election or get into politics, but with many observers claiming that the former president won the first presidential debate, it’s worth looking at ETFs representing sectors and assets that could benefit significantly if Donald Trump wins and returns to the White House.
Here are three ETFs: the Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI), the iShares Bitcoin Trust (NASDAQ: IBIT), and the SPDR Energy Select Sector Fund (NYSEARCA:XLE).
If Trump wins the November election, he will have the opportunity to appoint his own administrators and regulators to important positions. This would significantly influence U.S. policy toward various sectors and make these ETFs potentially attractive investment opportunities.
Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI)
Based on Trump’s proposalscrypto pivot, a Trump administration would likely liberate the US crypto industry itself, and perhaps no segment of the industry would benefit more than Bitcoin (BTC-USD) minors, in which the WGMI ETF invests.
The Biden administration had previously proposed imposing a hefty excise tax on bitcoin miners, which would subject them to a prohibitive 30% tax on their electricity costs, making bitcoin mining untenable in the United States. It’s no secret that Biden and his administration are not fans of what they consider an energy-intensive industry.
On the other hand, Trump has a significantly more favorable view of the industry. In fact, Trump recently met with the CEOs of Marathon Digital (NASDAQ:MARA) and anti-riot platforms (NASDAQ:RIOT), two of the largest publicly traded Bitcoin miners, to listen to their concerns and offer support.
Industry executives from various crypto companies have expressed concerns to Trump that some of the industry’s brightest minds are leaving the United States due to a hostile regulatory climate, which has led Trump to declare: “We’ll take them in if we want them to stay.” »
After meeting with them, Trump emphatically declared his support for the industry, saying he wanted everything else Bitcoin will be made in the United States
WGMI is a unique and efficient way to gain undiluted exposure to Bitcoin miner stocks. The entire ETF is dedicated to Bitcoin miners as well as semiconductor companies like Nvidia (NASDAQ:NVDA) and advanced microdevices (NASDAQ:AMD) whose graphics processing units (GPU) enable Bitcoin mining.
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You can view an overview of WGMI’s Top 10 Titles below.
It’s somewhat of a “high risk, high reward” investment, as it’s a small ETF with just $123.7 million in assets under management and little diversification, as it only owns 20 stocks. Additionally, its expense ratio of 0.75% is on the higher end of the spectrum.
For these reasons, an investment in WGMI is probably not for everyone, but if Trump wins and ushers in a new administration that treats the Bitcoin mining industry more favorably, it’s hard to think of an investment that would benefit more, so I’m bullish on WGMI.
Is WGMI Stock a Buy, According to Analysts?
On Wall Street, WGMI gets a Moderate Buy consensus rating based on 18 Buys, two Holds and one Sell ratings assigned over the past three months. WGMI stock average price target of $29.56 implies an upside potential of 39.4% from current levels.
iShares Bitcoin Trust (NASDAQ:IBIT)
As noted above, a Trump administration would certainly treat the burgeoning cryptocurrency industry more favorably than a Biden administration. Additionally, Trump would have the ability to appoint his own regulators, potentially relieving the industry of many of the onerous regulations it currently faces.
Trump took advantage of his social truth platform to declare: “Our country must be the leader in this field, there is no second place… I am very positive and open-minded about cryptocurrency companies and all that which concerns this new booming industry. »
As an ETF that offers investors undiluted exposure to Bitcoin by purchasing it directly, BlackRock’s iShares Bitcoin Trust (NYSE:BLK) is a simple and effective way to make a directional bet on Bitcoin and the growth of the crypto industry under the Trump administration. Additionally, if you don’t want to take on the operational risks and other company-specific considerations that come with investing in Bitcoin miners or other crypto-related companies, IBIT offers an elegant way to simply bet on Bitcoin itself.
IBIT is the largest of the new Bitcoin ETFs launched in early 2024, with $18.9 billion in assets under management (AUM). IBIT has taken the market by storm, reaching $10 billion in AUM in just 37 days, highlighting the strong demand for Bitcoin exposure by the investing public in the United States. A pro-crypto president would likely further boost Bitcoin’s appeal to the general public. Additionally, IBIT is a cost-effective way to gain exposure to Bitcoin via an ETF, with a cost-effective expense ratio of just 0.12%.
SPDR Select Energy Sector Fund (NYSEARCA:XLE)
Trump is pro-oil and clearly more pro-oil than current President Joe Biden, so a Trump presidency would be a big boost for the U.S. shale industry. XLE is a great way to invest in this space because it gives investors exposure to the S&P 500 energy sector (SPX), with significant positions in major energy companies like ExxonMobil (New York Stock Exchange: XOM) and Chevron (NYSE: CVX) as well as other top US oil stocks.
You can view an overview of Top 10 XLE Titles below.
Additionally, the XLE features a dividend yield of 3.2% and charges very low fees with an expense ratio of just 0.09%. This means that an investor in the fund will pay just $9 in fees on a $10,000 investment per year.
Is XLE Stock a Buy, According to Analysts?
As for Wall Street, XLE earns a Moderate Buy consensus rating based on 19 Buy ratings, five Holds, and no Sell ratings assigned over the past three months. THE average price target for XLE stock of $109.03 implies 19.4% upside potential from current levels.
Looking ahead to November
It is too early to say who will win the United States presidential election, and the purpose of this article is not to predict or endorse a winner.
That said, it’s never too early to look ahead, and it’s never a bad idea for investors to think about which sectors and investments could see upside or downside based on the election. Additionally, investors should consider positioning their portfolios to take advantage of these potential changes.
I am bullish on these three ETFs, WGMI, IBIT and XLE, as they could all be the biggest beneficiaries of a Trump victory in November. This is based on the fact that a Trump administration would regulate and treat the energy and cryptocurrency sectors very differently than the current Biden administration.