A Week Later, ETF Winners And Losers From The Election

by on November 14, 2012 | ETFs Mentioned:

Leading up to last week’s presidential election, the financial media was full of predictions about asset classes that would do well in the event of the various possible outcomes. From big banks to green energy to TIPS, just about everyone had a prediction for what would thrive and what would struggle in the wake of the exercise in democracy. Now, a week later, we have the benefit of hindsight to see how markets actually reacted to the news that Obama had been re-elected, along with a Republican House and Democratic Senate. Below we take a quick look at the asset classes that ended up being big winners and losers from the 2012 election [Download 101 ETF Lessons Every Financial Advisor Should Learn]: 

The Winners: Silver, T-Bonds, Gold Miners

Markets have generally sunk lower in the past week as investors have turned their attention towards the looming fiscal cliff and the potential havoc it will wreak on global stock markets. But a handful of asset classes have performed very well amid the sell-off–including a few surprises [see the 100 best non-leveraged ETFs over the past week]:

  • Silver ETFs: The “other precious” metal has been one of the best performers since the election, spiking as investors flocked towards hard currency. The physically-backed SIVR (SIVR, B+) and SLV  (SLV, B-) were up about 4% for the week ended November 12, while the futures based DBS (DBS, B) gained a similar amount.
  • Long-Term Treasury ETFs: We keep hearing about a bond bubble, but the last week proved once again that long-term Treasuries remain one of the most effective forms of protection against turbulence in stock markets. The 25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ, C+) popped about 4.2% during the week ended November 11, while the Extended Duration Treasury ETF (EDV, A-) was up about 3.9%.
  • Gold Miners: Perhaps a surprise beneficiary from the election were gold miners, specifically the more speculative junior miners. The Market Vectors Junior Gold Miners ETF (GDXJ, B+) was up about 3% during the past week, benefiting from higher gold prices as investors sought out hard assets [see Actionable ETF Trading Ideas].

The Losers: Greece, Homebuilders, Coal, and MLPs

With markets generally in freefall over the past week, the losers significantly outnumber the winners. But some asset classes suffered much more extreme declines than others in recent days:

  • Greece: Greek stocks have been sliding sharply lower in recent days, though the connection to the U.S. election is perhaps difficult to make in this case. Continuing uncertainty over the bailout prospects has pushed the FTSE Greece 20 ETF (GREK, B-) down about 8.7% over the past week.
  • Homebuilders: After an impressive start to 2012, homebuilder ETFs have fallen flat over the past week. The Dow Jones U.S. home Construction Index Fund (ITB, A) is down about 6.1% over the past week, while XHB has declined about 5.4%.
  • Coal: Coal companies didn’t respond well to the Obama re-election, as investors are apparently nervous about increasingly tough regulations against the industry. The PowerShares Global Coal Portfolio (PKOL, n/a) lost about 6.1% in a week, while KOL (KOL, B+) declined by a similar amount.
  • MLPs: Another corner of the energy industry that was recently performing well has fallen on hard times, as generally stable MLPs have seen big declines in value over the past week. These losses may relate to the income tax uncertainty; hikes to dividend taxes could diminish the appeal of these securities to some investors. The Cushing MLP High Income Index ETN (MLPY, B+) lost about 5.9% of its value over the last week; YMLP (YMLP, A-) dropped about 5.7%.

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Disclosure: No positions at time of writing.