The passage of the One Big Beautiful Bill in the U.S. House has ignited new momentum in ETF markets, with sector-specific ETFs already reacting to the sweeping policy changes embedded in the proposed legislation. While the Senate will likely revise the bill, early signals suggest significant consequences across multiple segments—including healthcare providers, clean energy, defense contractors, and rate-sensitive sectors like long-term Treasuries and residential REITs.
CFRA's preliminary analysis identifies both winners and losers:
- Winners: iShares U.S. Aerospace & Defense ETF (ITA) may benefit from the bill’s $150 billion defense funding injection, boosting firms like Lockheed Martin, RTX, and Palantir.
- Losers: Healthcare and managed care ETFs, including iShares U.S. Healthcare Providers ETF (IHF), are exposed to accelerated Medicaid work requirements.
- Clean Energy ETFs like ICLN and TAN face policy headwinds due to revised IRA tax credit rules.
- Long-Term Treasury ETFs such as TLT are at risk from weakened demand amid rising debt issuance forecasts.
For ETF investors, understanding how fiscal policy reshapes sector allocations is critical. As always, ETF flows may not always align with long-term returns, especially when investor sentiment tries to front-run government policy.
For a deeper dive into specific ETFs, holdings, and fundamental equity views across healthcare, clean tech, and defense industries, access the full report.