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Obama or Romney? Win With These ETFs


A Romney victory may benefit oil and gas stocks stocks, as well as financials, while an Obama victory may help the health care and clean energy sectors thrive.


Romney supports less regulation on the financial sector. In particular, he has pledged repealing the Dodd-Frank Act and replacing it with more streamlined regulation. He believes that the onerous regulations have weakened the economic recovery, as the banks focus on compliance instead of lending.

According to S&P estimates, the eight largest US banks stand to lose between $22 billion and $34 billion in annual revenue as a result of the Dodd-Frank Act. Most of the projected costs would be due to the Volcker Rule. If the Dodd-Frank Act is repealed, big banks will benefit substantially.

Most likely Romney administration will come up with revamped version of the Act, which would accommodate some of the highly profitable but risky activities, by relaxing the rules governing the derivatives market and restrictions on investments in private equity and hedge funds.

Financial Select Sector SPDR (NYSEARCA:XLF)

XLF, which tracks the Financial Select Sector Index, is the most popular ETF in the financial services space, with more than $7.9 billion in assets. Additionally, it is very cost effective with just 18 basis points in expense ratio and very tight bid-ask ratios.

The ETF holds 81 securities but assigns more than 50% of the assets to its top 10 holdings, which include all big names in the financial sector. It pays out a decent yield of 1.67% currently.
No positions in stocks mentioned.
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