3 ETFs In Focus As Election Nears

ETFs have earned the respect of countless investors as viable financial instruments well suited as core building blocs for achieving diversified, cost-efficient exposure to virtually any asset class. Exchange-traded products have also become a favorite of many active traders who value their ease-of-use, liquidity and unparalleled transparency. As such, these vehicles can serve as tools for anyone looking to make a tactical play in the market, and with the presidential election inching closer every day, several intriguing ETFs may warrant a closer look .

Presidential elections have a history of sparking volatile trading on Wall Street, and given the looming eurozone debt drama this timearound, many investors are bracing themselves for a handful of whiplashes. In light of this, we highlight three ETFs that may encounterfundamentalheadwinds, or tailwinds, as Barrack Obama clashes with Mitt Romney:

1. PowerShares WilderHill Clean Energy Portfolio (PBW)

Mitt Romney has vowed to make the United States totally energy independent over the next eight years by implementing a substantial increase in the domestic production of oil and natural gas. While his pro-energy policy bodes well for fossil fuel producers, the green energy sector appears poised to get the short end of the stick. Simply put, under Romney, alternative energy companies will likely receive far less subsidies, which could have a detrimental impact on the already struggling sector.

The most popular offering in the Alternative Energy Equities space is PowerShares's PBW, which commands nearly $140 million in assets under management. PBW's component companies that focus on renewable sources of energy will likely get little to no love from Romney, seeing as concerns over the global climate are nowhere to be found on thecandidate'spriority list.

2. Vanguard Dividend Appreciation ETF (VIG)

With interest rates stuck at record lows and expected to remain there for the foreseeable future, investors of all styles have been scrambling to beef up their portfolio's current income. As such, dividend ETFs have found their way into countless portfolios, although recent political debates have welcomed clouds of uncertainty in this space. President Obama has noted that individuals in the higher tax brackets could pay as much as a 39.6% tax on dividends if the Bush-era tax cuts are left to expire .

Mitt Romney on the other hand has stated that he would keep the tax rate on dividends at a maximum of 15%; this could in turn encourage inflows for dividend-focused ETFs as investors continue to embrace this product structure when it comes to enhancing their portfolio's yield in this ultra-low rate environment. Each candidates' policy could have asignificantimpact on the Vanguard Dividend Appreciation ETF, which boasts a commanding presence within the Large Cap Value Equities ETFdb Category; VIG currently holds over $12 billion in assets under management and features 30-day SEC yield of 2.24%.

3. State Street Health Care Select Sector SPDR (XLV)

The ongoing push towards Obamacare has inevitably brought the spotlight onto the healthcare sector as eachcandidatehas sought to address this policy. While Obama's Affordable Healthcare Act will impose roughly $85 billion in fees upon drug companies over the next decade to fund the program, the longer-term effects may actually be far more bullish for the industry than many might expect. Although drug manufacturers may take a hit come earnings season, the mandate will provide for an inflow of patients who were previously uninsured over the long-haul; as such, the growing base of patients is sure to spawn increasedconsumptionfor healthcare services and products of all sorts over the coming years .

Obamacare appears to be a blessing in disguise for many healthcare companies that are well positioned to benefit from the growing number of insured patients in the United States. XLV presents itself as a viable offering for those interested in making a play in the domestic healthcare sector; this ETF boasts an impressive $4.8 billion in assets under management and its top holdings include well-known bellwethers like Johnson & Johnson (JNJ), Pfizer (PFE) and Abbot Laboratories (ABT).

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Disclosure: No positions at time of writing.