ASX exchange-traded funds (ETFs) have surged in popularity over the past few years, especially among younger investors.
They offer a quick and easy way to achieve instant diversification by purchasing a basket of ASX shares or international shares in one go for a single brokerage fee.
As we reported recently, ASX ETFs invested in international shares are particularly popular with Australian investors this year due to the outperformance of the S&P 500 Index (SP: .INX) vs. the ASX 200.
According to Vanguard and ASX research, international shares ETFs have attracted more than 56% of total cash inflows from investors this year.
So, with the United States election upon us, Betashares Senior Investment Strategist Cameron Gleeson has shared his ideas as to which ASX ETFs may benefit if Donald Trump takes the presidency.
In a new article, Gleeson explores how Trump's policies could impact the global economy and markets, bearing in mind that the impact will also depend on whether the Republicans gain control of Congress.
Let's take a look.
Trump's key policies
Gleeson provides the following overview of the key Trump policies that he thinks matter most.
Taxes and spending
- Cut corporate tax rate from 21% to 15%
- Increase taxes on buybacks and companies' foreign income
- Extend 2017 personal tax cuts for all
- Eliminate US tax on Americans living abroad
- Tax deductions on auto loans
- Repeal green tax incentives in the Inflation Reduction Act (IRA)
- End US aid to Ukraine
Trade and Tariffs
- Impose universal (10%-20%) tariff on all imports
- 60% tariff for all Chinese imports and revoke China's 'Most Favored Nation' status
- Further tariffs on certain auto imports
Immigration, Energy, and the Federal Reserve
- Deport unauthorised immigrants, strengthen border controls and reduce immigration
- Repeal the IRA green subsidies
- Boost oil and gas development, LNG exports and power plant construction
- Potentially allow input from the President on Federal Reserve policy
ASX ETFs that may benefit from a Trump Presidency: expert
BetaShares S&P 500 Equal Weight ETF (ASX: QUS)
Gleeson says the ASX ETF QUS would play on Trump's 'America First' mindset:
Domestically focused US companies have more to gain and less to lose from a possible trade war and protectionism.
This could favour the S&P 500 Equal Weight Index (which QUS seeks to track, before fees and expenses) relative to the market cap weighted S&P 500 Index that is currently dominated by large global tech companies.
Betashares Global Energy Cos-Currency Hedged ETF (ASX: FUEL)
Gleeson says the ASX ETF FUEL may benefit from increased energy production in the US:
Under Trump's plan to ramp up energy production, oil and gas companies could grow revenue even if oil prices go lower, as well as enjoying lower exploration and production costs and lower taxes.
BetaShares Gold Bullion-Currency Hedged ETF (ASX: QAU)
Gleeson says the ASX ETF QAU is an option for investors seeking exposure to the gold price when currencies are volatile:
Conventional wisdom is that Trump's policies will lead to a higher USD, however, he has explicitly stated he will bring the USD down. It is possible that greater currency volatility may result.
Foolish takeaway
Gleeson says investors should be mindful that any potential upside to stocks or ASX ETFs resulting from a Trump victory may be limited to a short post-election bump.
"In the longer term, markets are more beholden to macro-economic fundamentals than politics," he says.
Here at The Motley Fool, our analysts do not advocate trying to time the market. Our team recommends taking a long-term view and using fundamental analysis to choose which ASX ETFs or shares to invest in.
