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Vanguard FTSE Developed All Cap Ex U.S. Index ETF (CAD-hedged) (VEF)
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Vanguard FTSE Developed ex North America High Dividend Yield Index ETF (VIDY)
Q: Hi Peter and team,
European ETFs such as the ones listed above have a relatively high concentration of pharmaceuticals. With Trump's plans to curb such imports to the US, do you believe that this will be a headwind for these ETFs?
Your insight is greatly appreciated.
European ETFs such as the ones listed above have a relatively high concentration of pharmaceuticals. With Trump's plans to curb such imports to the US, do you believe that this will be a headwind for these ETFs?
Your insight is greatly appreciated.
5i Research Answer:
It will likely be a slight negative. Roche, for example, a holding, has $29B in sales in North America and pressure on prices may certainly lower margins. But there is some dilution; if an ETF owns, say a 5% position in a pharma, it may only have half its sales in the US. Then, it is quite likely that European drug prices creep up slowly, since Trump wants prices to match. So there is a bit of an offset, and, for, say VEF (via VEA) at 6.5% pharma weighting right now, we doubt it will be hugely material, especially considering lower European valuations already.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VIDY.