Best ETF Picks To Consider As Presidential Elections Approach
The Presidential Elections are due in November 2024. Trading.biz analyst Rahul Nambiampurath believes the period leading up to the elections could be marked by heightened volatility.
“Every poll, policy proposal, and debate becomes a reactive space for investors,” Rahul says. For instance, if a proposal favouring green energy shows up, renewable energy stocks might surge, whereas the legacy energy sectors might feel the heat. Anything and everything will be sentiment-driven leading up to the election.
Pre-Election Investing Trends
Preferences might shift towards the more risk-averse assets like gold or bonds. Yet, some ETFs still make a compelling case. Rahul has picked a few ETFs that might have the potential to offer stability and even growth prospects amid market uncertainty.
These include:
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Vanguard Dividend Appreciation ETF (VIG): Up 5.82% year-to-date
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ATAC U.S. Rotation ETF (RORO): Up 1.64% year-to-date
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iShares 20+ Year Treasury Bond ETF (TLT): Down 6.40% year-to-date
In addition to the mentioned names, Rahul recommends keeping the Utilities Select Sector SPDR ETF (XLU) and the Invesco S&P 500 Low Volatility ETF (SPLV) in mind.
The Rationale Behind the Picks
With Vanguard’s VIG, Rahul focuses on dividend-paying options, hinting at strength and stability. Electronic Technology, Finance, and Technology services are the key players of VIG, with Microsoft (MSFT), Apple (AAPL), and Broadcom Inc. (AVGO) being the top three holdings.
Investing in RORO is all about a tactical rotation between fixed-income picks and equities, as this ETF is a pro at rebalancing. Furthermore, iShares’ TLT typically holds long-term treasury bonds, a haven considering market turbulence.
Rahul also points out that Invesco’s SPLV targets the least volatile S&P 500 stocks, catering to traders who still prefer equities. Finally, the XLU ETF is specific to Utilities, a defensive space often unresponsive to fluctuating economic conditions.
The analyst also mentions that if there is only one option to choose from, the Vanguard Dividend Appreciation ETF (VIG) makes the best play. This is due to steady buying volume, a clear uptrend despite the rate cut and other relevant discussions, and a balanced portfolio comprising firms that value income generation and capital appreciation simultaneously.
VIG ETF daily chart: TradingView
VIG’s daily chart also shows the continuation of an aggressive EMA crossover, showing that the uptrend might be far from over.
The Vanguard Dividend Appreciation ETF (VIG) also features in Morningstar’s list of the best dividend ETFs for 2024, making it all the more desirable.