The US presidential election was over 3 months ago. That time I’ve published the article of What Trump Means for Your Investments, where I’ve checked the market reactions of the first week. Now, after more than a quarter of a year it might worth to take a look where we are.
If you are an index investor, of course such reviews don’t mean a lot. But if you invest a bit more actively, identifying the current market trends might help making better investment decisions.
Just for a quick recap: the first market reaction after the election were the following:
- Financial, pharma and infrastructure stocks were over performing
- Alternative energy and technology stocks were under performers, furthermore there was also a sell off in US bonds
In order to see where we are now, I’ve compared the performance some related ETFs:
- Vanguard Financials ETF (VFH)
- Vanguard Health Care ETF (VHT)
- Vanguard Infrastructure ETF (VIS)
- Vanguard Information Technology ETF (VGT)
- First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
- Vanguard Total Bond Market ETF (BND)
- Vanguard Total Stock Market ETF (VTI) as a benchmark
The result is summarized in the below chart (click to enlarge):
What we can see is the following:
First of all financials are the clear winners. Since the elections VFH has gained nearly 23%! We’re talking about a sector that still couldn’t fully recover since the financial crisis. Maybe we are looking at the beginning of a new trend here. From my side in the future I will keep on slowly adding VFH to my portfolio, as I already mentioned back in November.
The second best performer is surprisingly the green energy ETF. It is still very early to see how the Trump administration will affect this industry. The good performance can more relate to the fact that oil prices seem to stabilize above $50.
The infrastructure ETF is the third best performer, even though the optimism in the sector during the first month seemed to be higher. Still, VIS so far over performs the total stock market.
The title might be a bit harsh, especially considering that the Vanguard Information Technology ETF still gained over 10% in 3 months. This is almost exactly the same as the performance of VTI over the same period. Until the beginning of last December it seemed like the sector will badly under perform, but since then there was a big rally in these stocks. Just look at Apple, Facebook or Netflix.
The under performance of the health care sector is a bit more surprising. Nevertheless we are still talking about over 8% gains. Nothing to complain about.
So far the clear losers are US bonds. The Vanguard Total Bond Market ETF lost over 2.5% of its value during this period. This year the market expects 2 more FED interest rate hikes. Let’s see how high it will push the bond yields (i.e. lower bond values).
This is where we are at the moment. Are we seeing some new trends here? In some areas like the financial sector I believe this could be the case.
What is your view in this topic? Do you think there are some other trends out there that worth mentioning? Please share your thoughts in the comments section!
Please subscribe to the weekly newsletter and never miss a new post!
Disclaimer: This post or any other information on the site is not intended to be and does not constitute financial advice or any other advice. I am solely sharing my idea, plan and progress on financial independence and early retirement.