How Trump's 'Maganomics' Could Power Industrials-Focused ETFs

Donald Trump's economic planning is often referred to as "Maganomics," a phrase based on his campaign slogan, "Make America Great Again.”

Trump’s policy ideas have led to divided opinions between economists and investors, according to a report by the Financial Times. The former worry about the potential shortcomings of protectionist policies such as tariffs and immigration curbs, while investors are focusing on the brighter side, especially for U.S. manufacturing. And here's where things get interesting— certain ETFs might gain from these dynamics.

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Trump's targeted tariffs and pro-business standpoint is designed to increase domestic manufacturing and attract investment into sectors like industrials and materials. The idea is simple: by imposing tariffs on imports, U.S.-made goods become more competitive and encourage domestic manufacturers to up their production. For investors, this shift can push economic growth, despite warnings from experts.

This optimism among investors makes ETFs heavy on manufacturing and industrial growth particularly appealing. Funds like the iShares U.S. Industrials ETF IYJ or the SPDR S&P Metals and Mining ETF XME could gain directly from increased investment in American factories and infrastructure. These ETFs provide exposure to companies that are likely to thrive under policies encouraging domestic production.

The iShares U.S. Industrials ETF has an expense ratio of 0.39% and includes some big names in the industrials sector, like GE Aerospace GE, Honeywell International HON and Lockheed Martin LMT in its holdings.

Meanwhile, the SPDR S&P Metals and Mining ETF, with an even lower expense ratio of 0.35%, is exposed to the steel industry by 51.04%, coal and consumable fuels by 13.31%, aluminum by 7.18% and diversified metal and mining by 5.58%, among others.

An analyst at T. Rowe Price, cited by the Financial Times, suggests that Trump’s pro-business policies could encourage companies previously hesitant under past administrations to boost their spending.

This could also help funds like the Vanguard Industrials ETF VIS, which invests in a broader range of industrial sectors.

Ultimately, the appeal of "Maganomics" for investors lies in how likely it is to create short-term winners, especially in manufacturing and industrials. ETFs that play with these themes could allow investors to ride the wave of optimism while diversifying risk.

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