One of Wall Street’s favorite games right now is gaming the 2016 election. What stocks will soar if Hillary Clinton enters the White House? What stocks will collapse if Donald Trump ascends to the presidency in November?
Wouldn’t you rather feel snug and secure no matter what November brings?
Fidelity exchange-traded funds provide investors with a number of ways to build their portfolio. Some Fidelity ETFs suit the aggressive. Others are more fitting for chasing down investing trends. And still others — like three I have in mind today — make perfect sense amid a tumultuous political and financial climate.
These three best Fidelity ETFs are a mix of sound active management and cost-efficient indexing that will stand their ground. Clinton, Trump, Johnson … it doesn’t matter. You’re in good hands with these funds.
Best Fidelity ETFs: Fidelity Total Bond ETF (FBND)
Expenses: 0.45% ($45 annually for every $10,000 invested)
Fidelity Total Bond ETF (NYSEARCA:FBND) is a buffer for volatile times. This actively managed ETF — that’s right, it’s an ETF that is run by one of the best active bond investors in the business, Ford O’Neil (along with Michael Foggin and Michael Plage) — owns investment-grade government and corporate bonds in a portfolio that benchmarks against the common bond investing benchmark, the Barclays U.S. Aggregate Index.
The fund began trading in October 2014 and has a market value of $183 million. FBND has the added benefit of having proven active bond managers at its helm compared to the autopilot of the index. This can make and has made a material difference. The three experienced bond managers can shorten or lengthen duration (to defend against rising rates or provide offense in declining economic times) faster and more than the index and any index based product.
O’Neil, Foggin and Plage invest in all types of bonds, and use the Barclays U.S. Aggregate Index as a guide when making investment decisions. They provide deeply informed bond selection and positional weighting rather than mere bond aggregation.
In the latter half of 2016, these benefits will likely come in handy.
Best Fidelity ETFs: Fidelity MSCI Health Care Index (FHLC)
Buy Fidelity MSCI Health Care Index (NYSEARCA:FHLC) on political dips. I expect healthcare swoons before, during and after the November election. But such political fainting spells will be dispelled quickly by the obvious and necessary secular growth trends that healthcare encompasses (aging demographics and emerging market demand growth).
This passive sector ETF is focused on an industry that represents 17.5% of our GDP. It is domestically focused, but the companies it holds are mainly global in terms of the goods and services they provide. (Foreign investments make up 1.4% of the holdings.)
The MSCI USA IMI Health Care Index spans the production of healthcare equipment and services, as well as those that are engaged in the R&D, production, and marketing of pharmaceutical and biotechnology products.
FHLC’s top holdings include Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE) and UnitedHealth Group Inc (NYSE:UNH).
Best Fidelity ETFs: Fidelity MSCI Materials Index (FMAT)
Making America great is job No. 1. Whether you’re a Democrat, Republican or Green Party adherent, it makes sound political and economic sense and dovetails with the jobs agenda that crosses party lies and lines.
In contrast to healthcare, which accounts for 15.1% of the S&P 500, materials accounts for a mere 2.9% of the index. But Fidelity MSCI Materials Index (NYSEARCA:FMAT) could turn out to be a win-win … no matter who dons the presidential crown in November. Shovel-ready infrastructure plays require the goods and services the companies in this index provides. Throw into the mix the massive stimulus efforts underway in Europe and Japan, and you have a bumpy but navigable road for these boots-on-the-ground companies.
The MSCI USA IMI Materials Index pipes in chemical manufacturing, construction materials, glass, paper and forest products, as well as companies involved with metals, minerals and mining. Thus, top holdings include the likes of Dow Chemical Co (NYSE:DOW), Ecolab Inc. (NYSE:ECL) and Newmont Mining Corp (NYSE:NEM).
Jim Lowell is the editor of Fidelity Investor. Sign up for Fidelity Investor today and you’ll also receive his free report on the top sector funds and ETFs for 2015.