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What a Joe Biden win could mean for the ETF industry

Exchange-traded funds are in for an eventful election season.

As former Vice President Joe Biden leads President Donald Trump in the polls less than a month ahead of the presidential election, some ETFs are already starting to trade on a Biden victory, Jim Lowell, chief investment officer at Adviser Investments told CNBC’s “ETF Edge” on Monday.

“A Biden win I’d say is almost priced in … given that all the polls suggest that he’s significantly ahead of the president,” Lowell said. “Where I think it favors most will be in the overlooked, underappreciated, unloved areas, the value side of the ledger.”

Those groups could benefit from a “massive stimulus injection” if Biden wins via his roughly $2 trillion infrastructure plan and focus on expanding access to information technology, Lowell said.

“I think you might see value begin to at least see a second oar in the water next to the growth side and technology,” he said.

Kevin O’Leary, chairman of O’Shares ETFs and a panelist on “Shark Tank,” cautioned against basing investments on polling data.

“I’ve learned since the Brexit vote never to use polls to make investment decisions. They’re entertaining, but they do not determine outcomes,” he said in the same “ETF Edge” interview.

If Biden does win, “he’ll inherit an economy somewhere between 8 and 9% unemployment,” O’Leary said. “His number one mandate will be to get those people back to work.”

That makes two centerpieces of Biden’s plan — raising taxes on corporations and investing in clean energy — difficult to square with the trillions of dollars involved in getting a handle on unemployment, O’Leary said.

“You’re pouring that on the economy. It makes no sense to tax it away as soon as you deliver it,” he said. “So, there’ll be a delay on tax increases, I would assume, for probably 24 months until they got unemployment below at least 5%.”

All in all, investors might be in for less of an impact than some might think in the case of a Democratic upset, O’Leary said.

“I’m going to make the assumption that the reason the market’s ignoring this election, more or less, is Biden’s going to be pretty benign,” he said. “He won’t be able to get much done, if anything, towards these dramatic changes in policy and that’ll be left for the election after he’s finished his first and only mandate. And I’m not trying to be critical at all. Age is a factor, obviously.”

Armando Senra, head of iShares Americas at BlackRock, agreed with O’Leary that election predictions shouldn’t drive investors’ decisions.

“What matters the most is … for investors to stay invested,” Senra said in the same “ETF Edge” interview. “If Biden wins, you’re going to see large fiscal stimulus that is going to come and support the market. So, ultimately, the most important thing is to have the election over. That will remove the uncertainty and that will be good for the market.”

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