(Bloomberg) -- Wall Street traders who threw caution to the wind by lavishing billions of dollars on a slew of ETF bets that would win big in the event of a Donald Trump presidential comeback are seeing their wagers pay off.
Trump’s US election victory lifted stocks and risk assets, in particular, Wednesday on bets the Republican will enact policies that are pro-business. Among those trades seen getting a boost from Trump’s administration are exchange-traded funds tracking Bitcoin and industrial stocks.
Bitcoin, the world’s largest crypto based on market value, hit a record Tuesday night. Throughout October, investors piled $4.6 billion into the iShares Bitcoin Trust (ticker IBIT), the ETF’s second-best month on record since launching at the beginning of 2024, while adding to other Bitcoin-tracking ETFs. The funds are all up roughly 6.5% Wednesday.
“Since President Trump’s election is seen as bullish for the cryptocurrency asset class, this should be something that feeds on itself,” said Matt Maley, chief market strategist at Miller Tabak. “Whenever any asset pushes to a new all-time high on key new-news, it usually leads to a significant breakout.”
A basket of industrials ETFs drew about $2 billion in October — the best month of inflows since March 2021, according to Bloomberg Intelligence. Although there’s been some outflows this month, traders who held onto their positions are reaping the benefits: the Industrial Select Sector SPDR ETF (ticker XLI), the biggest fund of the group, is up roughly 3.5%. Industrial stocks are seen benefiting from Trump’s pro-domestic manufacturing policies.
To be sure, a benign economy and steady earnings have buoyed risk assets but make no mistake: the imprint of the Trump Trade has been visible in the underbelly of ETF markets.
Shorter-term bets are also paying off. Before the polls closed on Tuesday, traders plowed nearly $800 million into a BlackRock Inc. fund tracking high-yield bonds — one of the biggest daily buys all year for the ETF. Wednesday morning a high-yield index rose to the highest level since January 2022.
There were, however, corners of the ETF market left untapped. Banks and consumer finance companies are likely to benefit from a lighter regulatory touch under a Trump presidency, but financials-focused ETFs saw relatively little inflows in October and net outflows the month prior.
Meanwhile, broad bets on the resiliency of the largest US stocks are paying off after Trump’s win. Investors piled into the SPDR S&P 500 ETF Trust (ticker SPY) for five consecutive days leading up to election day, the longest streak since September.
Other ETFs tracking the S&P 500 Index from Vanguard Group Inc. and BlackRock also each saw over half of a billion dollars in net inflows on Tuesday. Those funds are each up roughly 2%.
--With assistance from Isabelle Lee.
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