After Monday, there will be just 15 trading days left before
the 2012 U.S. presidential election. With the polls still tight,
investors are understandably wondering how to prepare for either
outcome, reelection for President Barack Obama or an upset by
Republican challenger Mitt Romney.
Analysts have been quick to
highlight sector ETFs
that could benefit from either result. While instructive, those
ideas usually are not surprising. For examples, many have said
financials will pop if Romney wins whereas a fund such as the
Health Care Select Sector SPDR (NYSE:
) stands to benefit if President Obama is re-elected.
Investors looking for global ETFs that could be impacted by
the election results need not look far. Those funds with heavy
exposure to Mexico could be impacted by the 2012 U.S. election.
the Financial Times notes
both President Obama and Romney seem to be focusing on the black
markets associated with Mexico, drugs and illegal immigration, at
a time when Mexican companies are investing in bulk in the
Tired political rhetoric also obfuscates the fact that
Mexican equities are soaring this year
. The iShares MSCI Mexico Investable Market Index Fund (NYSE:
) is up 25.3 percent year-to-date compared to a 14.6 percent for
the SPDR S&P 500 (NYSE:
Since EWW, which has almost $1.4 billion in assets under
management, debuted in the first quarter of 1996, there is a
track record with which to work in assessing the ETF's post-U.S.
election performances. Immediately following President Bill
Clinton's 1996 re-election, EWW was trading around $11.38. Ninety
days later, the ETF was higher by $1.
There are some things to consider with EWW and President
Clinton. He was a supporter of NAFTA and popular among Latino
voters. Not to mention, U.S. equities performed well for most of
his eight years in office. By the time the 2000 election rolled
around, EWW had gained about 33 percent from its February 1997
The 2000 election was obviously historic due to the fact that
winner was not readily apparent on Election Night, so over the
following 90 days, EWW traded lower. President George W. Bush
carried just 35 percent of the Latino vote in that election.
However, his previous job as governor of Texas and desire to
improve his standing with Latinos in 2004 may have been two
catalysts that helped EWW gain almost 50 percent by the end of
his first time.
garnered 44 percent of the Latino vote in
. Whether or not that had anything to do with EWW tripling from
November 2004 to May 2008 is certainly up for debate. EWW would
plunge during the global financial crisis and by the time of the
2008 presidential election, the ETF had merely doubled from late
President Obama's popularity with Latinos is debatable as
well, but polls indicate that demographic will begrudgingly vote
for him before heaping praise on Romney. Those polls show a split
on par with Gore/Bush in 2000 awaits (roughly two-thirds to Obama
and the remainder to Romney.)
From its 2009 bottom, EWW has nearly quadrupled. Again,
attributing that kind of move in an emerging markets ETF to any
U.S. politician is tricky business.
What is clear is that EWW has been a stellar performer this
year and its good times can continue regardless of which
candidate wins on November 6. Manufacturing jobs are departing
China in favor of Mexico and that likely has little to do either
U.S. party's policies. In other words, the candidate that will do
the most to boost trade with Mexico and bolster the country's
domestic economy will be the bigger benefit to EWW.
Speaking of Mexico's domestic economy, wages are rising, as
the FT reported, giving a lift to the country's growing middle
class. GDP growth could touch five percent this year. Those
catalysts could make the EGShares Emerging Markets Consumer ETF
) and the EGShares Emerging Markets Domestic Demand ETF (NYSE:
) compelling bets. ECON allocates 19.6 percent of its weight to
Mexico and the country accounts for almost 25 percent of EMDD's
For more on Mexico and ETFs, click
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