The 2022 election was held on Tuesday, Nov. 8. No decision has been made as to who won many of the key battles, including several pivotal seats in the U.S. House of Representatives and U.S. Senate. Here’s a look at the latest news and some ETFs that could see wide swings on the heels of the election.
What Happened: The Democrat party has held a majority in the House of Representatives, and an often tie-breaking lead in the Senate, along with a Democrat president in Joe Biden.
Some financial analysts have pointed to the positives that could be seen for the market with gridlock and a Republican-led Congress challenging a Democratic president.
At the time of writing, the Associated Press has called 376 of the 435 seats in the House of Representatives, with 175 Democrats and 201 Republicans. A total of 218 are needed to have a majority. Prior to the 2022 election, the House had 212 Republicans and 220 Democrats.
ETFs to Watch: Exchange traded funds can offer investors exposure to sectors or ideologies with a basket of stocks, instead of investing in just one or two stocks. With the potential of the political makeup of Congress changing, several sectors could be impacted and could offer ideas for ETFs.
The Point Bridge America First ETF MAGA was launched in 2017 and offers exposure to the Republican side of the political spectrum. The ETF tracks companies in the S&P 500 that make donations to the Republican Party. While not all these companies would stand to benefit from a Republican-led Congress, the ETF is often linked to positive news for the Republican Party or former President Donald Trump. The ETF has the ticker MAGA, which coincides with Trump’s acronym “Make America Great Again,” which was a slogan and rallying cry for Trump in the 2016 and 2020 presidential elections.
The ETF holds 150 stocks and has $15 million in assets under management. The ETF has returns of -0.6%, +43.7% and +57.4% over the last one year, three years, and five years respectively.
Similar to the America First ETF, the God Bless America ETF YALL is an ETF that focuses on one side of the political spectrum. The ETF, launched in October 2022, screens out companies that are considered left-leaning politically or have “liberal political activism and social agendas.” The ETF invests in U.S.-listed companies from various sectors and has $24.2 million in assets under management. The ETF is actively managed.
The iShares Global Clean Energy ETF ICLN is an ETF that could be favored by investors if the Democrats keep control of the House and Senate and could see declines of several components under a gridlocked Congress not focused on passing clean energy initiatives. The ETF invests in the clean energy sector.
The ETF has 100 holdings and has $4.9 billion in assets under management. It has returned -10.7%, +21.8% and +18.0% over the last one year, three years and five years respectively.
Like the iShares Global Clean Energy ETF, the Invesco Solar ETF TAN could benefit from the Democrats keeping control and could see pressure with a Republican-led Congress. The Invesco Solar ETF invests in companies in the solar energy sector on a global scale.
The ETF was launched in 2008 and now has 53 holdings with $2.2 billion in assets under management. The ETF has returns of -27.9%, +6.6% and +25.1% over the last one year, three years, and five years respectively.
Two sectors that could benefit from Republicans leading Congress could be healthcare and pharmaceuticals. Republicans have been against healthcare-for-all initiatives, and haven't been particularly vocal on cutting drug costs for Americans. The iShares U.S. Pharmaceuticals ETF IHE was launched in 2006 and holds 43 stocks.
The ETF has $412 million in assets under management, returning -6.2%, +31.3% and +29.0% over the last one year, three years and five years respectively.
What’s Next: It could be days before several of the most anticipated election races are decided. Investors will have to wait until it is known which political party has control of Congress and how big of an impact it could have on getting bills passed in the coming two years.
The potential of Trump launching a 2024 presidential campaign and Florida Governor Ron DeSantis announcing an intent to run could also impact many ETFs. Trump and DeSantis are seen as front-runners to become the Republican Party nominee in the upcoming election.
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