With election season underway, it’s a good time to think about what industries and ETFs stand to benefit from a Trump presidency if the former President wins the election. The point of this article isn’t to predict the outcome of the election or wade into politics, but with many observers saying that the former President won the first Presidential debate, it’s a worthwhile exercise to look for ETFs representing industries and assets that could benefit significantly if Donald Trump wins and returns to the White House.
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Here are three ETFs: the Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI), the iShares Bitcoin Trust (NASDAQ:IBIT), and the Energy Select Sector SPDR Fund (NYSEARCA:XLE).
If Trump wins in November, he will have the opportunity to appoint his own administrators and regulators to important positions. This would significantly shape U.S. policy toward various industries and make these ETFs potentially interesting investment opportunities.
Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI)
Based on Trump’s pro-crypto pivot, a Trump administration would likely unshackle the U.S. crypto industry itself, and perhaps no segment of the industry would benefit more than Bitcoin (BTC-USD) miners, which is what the WGMI ETF invests in.
The Biden administration previously proposed a heavy excise tax on Bitcoin miners, which would subject them to a prohibitive 30% tax on their electricity costs, effectively making Bitcoin mining in the United States untenable. It’s no secret that Biden and his administration are not fans of what they view as 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 Riot Platforms (NASDAQ:RIOT), two of the largest publicly-traded Bitcoin miners, to listen to their concerns and offer his support.
Industry leaders from a variety of crypto companies voiced their concerns to Trump that some of the brightest minds in the industry are leaving the U.S. because of a hostile regulatory climate, leading Trump to state, “We’re going to embrace them if we want them to stay.”
After meeting with them, Trump emphatically declared his support for the industry, declaring that he wants all the remaining Bitcoin to be made in the U.S.
WGMI is a unique and effective way to gain undiluted exposure to the stocks of Bitcoin miners. The entire ETF is devoted to Bitcoin miners as well as the semiconductor companies like Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) whose graphic processing units (GPUs) enable Bitcoin mining.
You can check out an overview of WGMI’s top 10 holdings below.
This is a bit of a “high risk, high reward” investment, as it is a small ETF with just $123.7 million in assets under management and little in the way of diversification, as it owns just 20 stocks. Furthermore, its expense ratio of 0.75% is on the higher end.
For these reasons, an investment in WGMI likely isn’t for everybody, 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?
Turning to Wall Street, WGMI earns a Moderate Buy consensus rating based on 18 Buys, two Holds, and one Sell rating assigned in the past three months. The average WGMI stock price target of $29.56 implies 39.4% upside potential from current levels.
iShares Bitcoin Trust (NASDAQ:IBIT)
As noted above, a Trump administration would certainly treat the burgeoning crypto industry more favorably than the Biden administration has. Plus, Trump would have the opportunity to appoint his own regulators, which would potentially unburden the industry from many of the onerous regulations it is dealing with now.
Trump has taken to his Truth Social Platform to state, “Our country must be the leader in the field, there is no second place… I am very positive and open minded to cryptocurrency companies and all things related to this new and burgeoning industry.”
As an ETF that gives investors undiluted exposure to Bitcoin by buying it directly, the iShares Bitcoin Trust from BlackRock (NYSE:BLK) is a simple, 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 a mere 37 days, highlighting the strong demand for Bitcoin exposure by the investing public in the United States. A pro-crypto President would likely further add to Bitcoin’s mainstream appeal. Also, IBIT is a cost-effective way to gain exposure to Bitcoin via an ETF, with a cost-effective expense ratio of just 0.12%.
Energy Select Sector SPDR 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 to the U.S. shale industry. XLE is a great way to invest in this space, as it offers investors exposure to the energy sector of the S&P 500 (SPX), with large positions in energy majors like ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) plus other top U.S. oil stocks.
You can check out an overview of XLE’s top 10 holdings below.
Furthermore, XLE comes with an above-average dividend yield of 3.2% and charges a very small fee 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 annually.
Is XLE Stock a Buy, According to Analysts?
Turning to Wall Street, XLE earns a Moderate Buy consensus rating based on 19 Buys, five Holds, and zero Sell ratings assigned in the past three months. The average XLE stock price target of $109.03 implies 19.4% upside potential from current levels.
Looking Ahead to November
It’s too early to say who will win the Presidential Election in the U.S., and the purpose of this article is not to forecast 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 what industries and investments could see upside or downside based on elections. Additionally, investors should consider positioning their portfolios to capitalize on these potential changes.
I’m bullish on these three ETFs, WGMI, IBIT, and XLE, as they could all be major beneficiaries of a Trump win in November. This is based on the fact that a Trump administration would regulate and treat the Energy and Cryptocurrency industries very differently than the current Biden administration has.
