Investors are all pretty much in agreement when it comes to which assets should benefit from Donald Trump’s return to power in the United States. But what will we have to do if this bottled up bet goes off the rails? The answer in three rather contrarian ETFs.
The Trump Trade had some hiccups last week, but we imagine that it could still merge with a Christmas rally. If we had to find a product to ride the wave, it would be a Russell 2000 ETF. The index of small American stocks is the archetype of what is supposed to work under Donald Trump’s mandate, at least in theory. The cheapest product available in the United States is the Vanguard Russell 2000 ETF (0.1% fees). Europeans can fall back on the Xtrackers Russell 2000 UCITS ETF (0.3%). But that is not the point of the day.
Indeed, given the gains already made by the American equity markets recently, their high valuation level and the mechanisms that are being put in place, can other opportunities emerge? Bank of America thinks no one puts a kopeck on international stocks or bonds, but things could change on 1is quarter 2025. Here are three strategies to consider according to the American bank:
- Buy US Treasuries if yields reach 5%.
- The pitch: “the Fed is forced to signal in the 1st quarter its determination to temper inflation expectations by not making any rate cuts in 2025. The bond market forces the new government to moderate customs surcharges“.
- A product: Vanguard US Treasury 0-1 Year Bond ETF (0.05% fees), useful for gaining exposure to short-term, fixed-rate US Treasury securities denominated in US dollars.
- Buy international stocks (China, Europe) before the inauguration of Donald Trump (scheduled for January 20).
- The pitch: “China will ease its tax policy and the ECB will cut rates aggressively in anticipation of tariff surcharges…lower rates, cheaper currencies, lower oil prices mean a significant easing of financial conditions in Asia and in Europe versus the US…bearish sentiment will soon approach humiliation buying levels.“
- A product: Xtrackers MSCI World ex USA UCITS ETF 1C (0.15% fees): an ETF that tracks 22 of the 23 most developed stock markets, excluding the United States. The most represented countries are Japan (20%), the United Kingdom (13.1%), Canada (11.2%) and France (10%). By comparison, the weight of stocks listed in the USA in the MSCI World Index is 72.7%.
- Buy gold (to “fight” against inflation. Also works with crypto, according to BofA).
- The pitch: “secular inflection point in globalization and upcoming inflection in demographics, plus the massive energy needs of AI…gold and cryptocurrencies remain the best hedges of secular inflation.”
- A product: Invesco Physical Gold ETC (0.12% fees). A classic for exposure to physical gold (see here the different ways to invest in gold).
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