ETF Areas Likely to Gain on Stimulus Executive Order of Trump

Sanghamitra Saha
·3-min read

On Aug 8, President Donald Trump tried to impose executive power by signing four actions on coronavirus relief, one of which will provide as much as $400 (lower than the previous benefit of $600 per week in the CARES Act) in enhanced unemployment benefits after the Democrats and the White House’s talks on a stimulus bill failed last week.

However, the unemployment benefits —25% of which states are being asked to cover — are being seen as futile as they may not be very helpful for the unemployed, per analysts.  A state must agree to enter into a financial arrangement with the federal government for additional benefits to the unemployed. Trump wants states to reserve $44 billion in previously approved disaster aid to help states, but he also added that the final call would be of the concerned states.

The other three actions he signed include a memorandum on a payroll tax holiday for Americans earning less than $100,000 a year, an executive order on "assistance to renters and homeowners" and a memorandum on deferring student loan payments, according to a CNN article.

Though the executive order is not foolproof, some sort of arrangements is better than a zero measure. Against this backdrop, below we highlight a few ETF areas that could gain ahead in the light of this order.

Invesco S&P SmallCap 600 Pure Value ETF (RZV)

U.S. small-cap stocks put up a decent show last week probably on undervaluation, some upbeat economic data points like jobs and manufacturing data, the likelihood of more government stimulus injection, low rates, and vaccine hopes. The latest executive order may boost investors’ confidence in the economic wellbeing of America. Since small-cap stocks are directly related to the domestic economy, RZV could be a good bet right now.

Invesco S&P SmallCap Consumer Staples ETF (PSCC)

The fund comprises common stocks of U.S. small-cap consumer staples companies that are principally engaged in the businesses of providing consumer goods & services that have non-cyclical characteristics, including tobacco, textiles, food, and beverage & non-discretionary retail. Some sort of unemployment benefits and tax holiday should keep consumer spending steady and benefit such small-cap companies.  

NETLease Corporate Real Estate ETF (NETL)

The fund comprises the U.S.-listed equity securities of companies that derive at least 85% of their earnings or revenues from real estate operations in the net lease real estate sector. The fund yields as high as 4.11% annually. 

The CARES Act previously imposed a brief moratorium on evictions of certain renters subject to certain conditions amid the pandemic.  Now, the government will identify any available Federal fund to provide temporary financial assistance to renters and homeowners, who are struggling to meet their monthly rental or mortgage obligations due to the pandemic.

The government will boost the ability of renters and homeowners to avoid eviction or foreclosure by providing assistance to public housing authorities, affordable housing owners, landlords and recipients of Federal grant funds.

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NETLease Corporate Real Estate ETF (NETL): ETF Research Reports
 
Invesco SP SmallCap 600 Pure Value ETF (RZV): ETF Research Reports
 
Invesco SP SmallCap Consumer Staples ETF (PSCC): ETF Research Reports
 
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