An Obama Victory Could Spark These ETFs

Investors know that Election Day is just a few weeks away and they know financial markets will let the world know if the outcome is desirable right away. Some sector ETFs are arguably already pricing in one outcome.

However, the polls show a nail-biter of an election is coming, so savvy investors will be preparing for either result. Everyone is entitle to their own opinions regarding President Obama and Republican challenger Mitt Romney, but know this: Beating an incumbent is hard. There have been 18 presidential elections since 1940, but only three incumbents have lost in that time Gerald Ford in 1976, Jimmy Carter in 1980 and George H.W. Bush in 1992.

In other words, it might be a good idea to prepare for an Obama reelection and these ETFs can help investors do just that.

ProShares UltraShort Oil & Gas (NYSE:DUG) The ProShares UltraShort Oil & Gas is a double-leveraged bearish play on the index tracked by the iShares Dow Jones U.S. Energy Sector Index Fund (NYSE:IYE), but DUG works as a hedge against most traditional energy ETFs.

Putting a bearish oil fund on a list of Obama reelection ETFs is tricky for two reasons. First, ETFs such as IYE and the Energy Select Sector SPDR (NYSE:XLE) are up during the president's time in office. Second, so is U.S. oil production.

What is important to note about increased U.S. oil production is where it is happening. It is not happening offshore nor on federal public lands. Critics would blame that on the Obama Administration. Oil production is increasing in states such as North Dakota and Texas in places like the Bakken and Eagle Ford shales where state commissions, not the federal government, dole out most of the exploration and production permits.

This is not a criticism of President Obama, but it does not take a political science professor from Harvard to figure out the politics of North Dakota and Texas are about 180 degrees removed from President Obama.

More importantly, this year stocks are higher, but only the Utilities Select Sector SPDR (NYSE:XLU) is less correlated to the S&P 500 than XLE has been. After XLU, XLE is the second-worst performing sector SPDR this year, according to State Street data.

PowerShares Global Wind Energy Portfolio (NASDAQ:PWND) Now this might be the type of energy ETF that benefits if the president is reelected. In the debate Tuesday night, President Obama did agree with Romney that fossil fuels are part of the energy equation in the U.S. However, the president also reiterated his commitment to alternative energy. In the process, he pontificated about folks in Iowa love good-paying wind energy jobs.

On the surface, it would appear the PowerShares Global Wind Energy Portfolio would be a logical winner should the president nab a second term. Be careful though. This ETF is off 30 percent in the past three years, indicating the Obama Administration has not been the boon for wind energy stocks that some would have thought four years ago.

iShares Dow Jones U.S. Healthcare Providers Index Fund (NYSE:IHF) Companies such as UnitedHealth (NYSE:UNH), IHF's largest holding with a weight of 14.4 percent, have been at the epicenter of the Obamacare debate. Now that insurance providers and hospital providers can prepare for the law, dark clouds hanging over these stocks has arguably come and gone. The good news Obamacare could mean plenty of new business for IHF constituents.

Even Romney wins, it would take too much time and too much precious political capital to overturn Obamacare in the first half of his first term. Conceivably, Romney's attempts to abolish Obamacare could prove futile at best.

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