New president, new strategies.
The last four years have seen leadership from various sectors, with technology, consumer discretionary and health-care stocks seeing the largest gains during the Trump administration.
Several new groups could take the lead under President Joe Biden‘s administration, two market analysts told CNBC’s “Trading Nation” on Wednesday.
“As far as the prior winners — technology — I think they continue to outperform and move higher. I think their steadiness is very underappreciated,” said Ari Wald, head of technical analysis at Oppenheimer.
“As far as a new idea, we would flag the emerging markets as a potential theme for the next four years.”
The iShares MSCI Emerging Markets ETF (EEM), which tracks the group, is up an impressive 82% from its March 2020 lows.
“Our time horizon is really only three-six months, but I think what’s worth noting is that EEM is breaking above resistance levels dating back 13 years to its 2007 peak,” Wald said, citing the above chart. “Following such an extended period of flat returns, I do see that long-term potential for [emerging markets] to continue to work. But again, I think this is just showing that global participation is broad-based and why I think equities in general continue to work higher in 2021.”
Three other themes could benefit from the environmentally conscious, infrastructure-driven and diversity-focused Biden administration, said Gina Sanchez, founder and CEO of Chantico Global.
“If you’ve looked at the incredible rise of ETFs like ICLN and QCLN, those are well-priced,” she said in the same “Trading Nation” interview, referring to the iShares Global Clean Energy ETF and First Trust Nasdaq Clean Edge Green Energy ETF, respectively.
“However, we think that there’s probably more legs to this and we’re still recommending to our clients that they still consider to look at clean energy,” she said.
Sanchez, also chief market strategist at Lido Advisors, flagged the Global X U.S. Infrastructure Development ETF (PAVE) as another potential Biden bet.
“PAVE is an infrastructure investment that actually plays broader than clean energy,” Sanchez said. “It also plays into the broad infrastructure spend that we’re going to see.”
Investments based on ESG, or environmental, social and governance factors, will also likely benefit from the blue wave, she said, flagging Vanguard’s ESG U.S. Stock ETF (ESGV).
“The Vanguard ESG fund … picks up some of the smaller clean energy names, but also picks up some of these larger social, and governance themes that Biden is really focused on beyond the environment,” she said.
