Dispelling The Worst Election Year ETF Advice

Markets Benzinga

You might have heard this is a presidential election year. In ETF Land, that means plenty of folks will be pontificating about which funds should outperform and lag if Democrat Hillary Clinton or Bernie Sanders wins. These prognosticators are also trying to figure out which ETFs are destined for greatness and disappointment if Republican Donald Trump wins.

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For the purposes of this article, the guess is that Clinton wins. Recent polls support that guess; but to be clear, neither this writer nor Benzinga is endorsing either candidate. Again, this writer is not revealing his political leanings.

Now, the good part: Rejecting what is perhaps the worst election year ETF advice floating around out there. That being buying alternative energy ETFs if Clinton wins. This investment theory is too cute to be valid, because it is almost entirely based on the assumption that Democrats are usually more in favor of solar, wind and related energy sources than Republicans are.

Related Link: Long-Term Investors Shouldn't Fear the 2016 U.S. Election

Democrat In The House, Alternatives For The Win?

While acknowledging that past performances are not guarantees of future returns, the returns of some well-known alternative energy ETFs during the current bull market, for which Democrat President Barack Obama has been in office over its duration, are not worth writing home about.

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President Obama had good timing. He took the oath of office just a few weeks before March 10, 2009 the start of the current bull market. However, that marked the start of some bad times for alternative energy ETFs. That is not necessarily President Obama's fault, but it does poke holes in the theory that a Democrat in the White House is good for alternative energy ETFs.

Historical Performance

For example, the Guggenheim Solar ETF (TAN) has lost 50 percent during the current bull market. In 2012, the year in which President Obama was reelected, TAN was reverse split...twice.

The PowerShares WilderHill Clean Energy(ETF) (PBW) has also been a dud during this bull market, shedding nearly 34 percent.

To be fair, the First Trust NASDAQ Clean Edge US (ETF) (QCLN) and the First Trust Global Wind Energy (ETF) (FAN) are up 56.7 percent and 40.2 percent, respectively during the current bull market.

But are those performances really something to brag about when remembering the S&P 500 is up almost 230 percent since March 10, 2009?

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