- SWDA MSCI Global ETF
- XDEQ World Quality Factor ETF (may change to XDEM soon as includes financials)
- Royal London Global Equity
- XLKQ Xtrackers MSCI World Quality ETF (better perf. at 46% than SWDA 26%, XDEQ 25%, EQQQ 30%, XDEM 31% in last year!)
- IITU iShares S&P 500 Info Tech Sect ETF GBP
- IUCM iShares S&P 500 Comm Sect ETF USD
- IUFS iShares S&P 500 Financial ETF USD
- EQQQ Invesco NASDAQ 100 (I will be increasing this soon)
Following the USA election results, the 'Trump effect' has given all of these a boost of between 2%-5% in the last few days.
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| 1YR Chart (EQQQ light-blue was 32% up) |
Middle and Small Caps USA stocks (e.g. Russell 2000) have done well too (I didn't invest in this sector) and my S&P 500 energy ETF IESU also jumped by 4%.
I also had recently bought some Palantir stock (14 shares) which have jumped 34% since Monday 4th Nov! Since this is an AI company and uses NVidia silicon which comes from abroad and which may be subject to import tariffs, this rapid rise may not be fully justified however.
Other stocks which seem to have suffered are USA green energy stocks and Chinese stocks mainly due to Trump threatening heavy import tariffs and export restrictions. This will have an effect on the Chinese imports of Lithium batteries, chips and electric cars. However, China (and even Europe) may retaliate next year by imposing their own import tariffs and restrictions on USA-derived goods.
So, as far as I can see, next year is going to be very turbulent depending on what Trump can actually get through Congress and then how the rest of the world responds (especially those countries who don't have free trade agreements).
The EU and UK are also bringing in tighter controls and regulations on imported goods which will mainly affect companies like AliExpress, Temu and even Amazon, etc. that export direct from China and don't have European distribution hubs. I am extremely cautious of any stocks which depend on Chinese production or imports, and businesses which export to China.
Although Trump wants to fully turn on the USA oil and LPG taps to increase exports, this will lower the world oil price and may have a knock-on effect on profits since oil is already priced quite low (although this does not seem to reflect in my home energy bills for some reason!).
Should I Buy now or Sell?
If you haven't already bought USA S&P 500 ETFs or NASDAQ ETFs, I think it is too late now - it is best to wait a bit for a dip. You might want to crystallise some of your recent gains now however.
If you are dollar cost averaging every month, I would suggest putting your money into a global ETF such as SWDA or XDEQ until things settle down (probably around Q3 2025). If you can find a similar global ETF with less emphasis on China, this may be better than SWDA or XDEQ. Investing into Tech ETFs such as IITU at the moment may be too volatile and expensive this month however. You might like to consider a communications/social media ETF like IUCM (38% in 1 yr) which has a core of USA companies (pref. buy on dip, not just now). I will also be buying more EQQQ on a dip as it contains Apple, MSFT, NVDA, AMZN, TSLA, META and ALPHA/Google.
Another good bet might be to also add into USA financials (e.g. IUFS). Trade restrictions will cause price increases which will lead to more debt and more borrowing (esp. as the Fed rate goes down), so finance companies will be lending out loads more $$$!
Due to the volatility expected next year, you might also want to consider investing in a good global actively managed fund (like Royal London Global Equity).
If you have made good gains (+10%) in the last week, you may wish to sell off some of these and increase your global ETF portfolio share holdings instead (buy on the next dip). I expect the recent euphoria will slump once this Trump hysteria hits the buffers of Congress and the economists calculate the true affect of the expected changes.
If you do have surplus cash to invest now, I would suggest holding off for now and only buying on the next dip, meanwhile maybe just use your spare cash to buy a money market ETF such as CSH2 to get the 5% interest (but watch out for high broker charges). Buy CSH2 inside a wrapper like an ISA as you may have to pay CGT and income tax (ERI) if inside a taxable account.
USA businesses relying on non-USA chip makers, non-USA battery makers and US health care insurers may also suffer.
One world ETF that I like for 2025 which does not include much Health Care is the small XWEM Xtrackers MSCI World Momentum ESG UCITS ETF. This has 27% Tech and 26% Financials and 16% Industrials and has outperformed many other world ETFs throughout 2024. It has only 166 holdings with the top holding NVidia only having 6% of the portfolio (top 10 holdings have 28%). It is also a 'low carbon' ETF but it is not available of all broker platforms. XZWO is a larger, similar ETF but has 10% health and FTWD/FWRG (low 0.15% TER) or XDEM are good alternatives too.
If Trump does manage to turn on the oil/gas taps of the USA, this might have a negative knock-on effect for non-USA oil producers as well as reduce the profits of all energy producers, esp. non-USA oil/gas producers.
Trump favours crypto currencies (for some reason - maybe to get the votes of the young?) so if you like a ride on the wild side you might like VanEck Crypto and Blockchain Innovators UCITS ETF DAPP (50% gain YTD) - but don't bet the farm on it!
I would expect stocks to be very volatile now and I would not be surprised if we saw a 10-15% dip in 2025, so I will be looking at selling 10-20% of my ISA portfolio and taking profits, keep the cash in CSH2 ETFs and then being prepared to sell CSH2 and buy ETF S&P 500 or NASDAQ stocks cheaply on a big dip - however, you may wish to just keep DCAing into a global ETF and USA Finance ETF instead (or just XWEM?).
The 'Trump effect' is a true wild card and soon there will no longer be a steady (sleepy?) hand on the tiller. Much of what dear Donald has promised may never materialise or alternatively it may have serious repercussions which will not only affect the USA, but the whole world. So hang on for the ride!
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Use justetf.com to look at the details of the ETFs mentioned above. This is not investment advice - please do your own research. What suits my risk profile may not suit yours!
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