The Anti-Trump Fund to Watch

electionYou can go to Las Vegas and bet on the U.S. election, or make a side bet with your friends.  Or you can buy an ETF.

Say what?  Professional investors have noticed that the iShares MSCI Mexico Capped ETF (ticker: EWW), an ETF that focuses its investments in Mexican stocks, is increasingly being driven up or down based on the polls that display the possible election odds of wall-building, NAFTA-renegotiating candidate Donald Trump.  As the Trump campaign gained steam in September, short-interest in the ETF rose 59%.  The fund has since recovered as Democratic nominee Hillary Clinton’s popularity rebounded after the recent Presidential debate.

Mexico’s economy was hard-hit by the decline in oil prices, and sluggish economic growth in the U.S. has had an impact on exports.  But the prospects of a Trump presidency, and a possible slowdown in trade with (and outsourcing from) the U.S. market, make investors skittish about investing in the Mexican economy’s near future.  Four-fifths of Mexico’s exports go to the U.S., and factories along the Mexican border with the U.S. have been replacing China as the outsource of choice for American manufacturers looking for less expensive labor. The head of Mexico’s central bank, Agustin Carstens, said that a Trump presidency would hit his country like a hurricane.

Rather than engaging in short-selling or speculative investing—a loser’s game, long-term—you might simply watch the ETF’s ups or downs heading into November.  Its fluctuations might turn out to be more accurate than the polls.  But it might also be helpful to remember that right up to the British Brexit vote, people were relying on the rising value of the British currency to tell them them that the smart money “knew” that the English people would vote to stay in the European Union.  And then they didn’t.



About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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