{"id":3840,"date":"2026-03-16T16:18:30","date_gmt":"2026-03-16T16:18:30","guid":{"rendered":"http:\/\/blog.valuengine.com\/?p=3840"},"modified":"2026-03-16T16:33:16","modified_gmt":"2026-03-16T16:33:16","slug":"geopolitically-themed-investment-risks-and-opportunities-take-center-stage","status":"publish","type":"post","link":"http:\/\/blog.valuengine.com\/index.php\/geopolitically-themed-investment-risks-and-opportunities-take-center-stage\/","title":{"rendered":"Geopolitically Themed Investment Risks and Opportunities Take Center Stage"},"content":{"rendered":"
The past 10 months has been characterized by rotation from dominance by the \u201cMagnificent Seven\u201d mega-cap tech companies to almost everything that had been beaten down prior to these market rotation trends.\u00a0 As documented in these blogs and our weekly market and strategy updates, the period from July 1, 2025 through January 24, 2026 were characterized by relative outperformance by small cap, midcap and value stocks.\u00a0 Now the market has changed character again.\u00a0 However, it has not swung back to technology.\u00a0 Geopolitics and ever-changing macroeconomic forecasts have driven markets more than underlying fundamentals in the past six weeks.<\/h5>\n

Trade ValuEngine supported portfolio strategies,<\/b> www.ValuEngineCapital.com<\/b><\/a><\/p>\n

There has also been a lot of sector and industry rotation.\u00a0 Some of these changes have been caused by valuations, but some of the largest rotations have been attributable to macroeconomic and geopolitical events. We almost hesitate to write this.\u00a0 Typically, strategists and reporters pay far too much attention to geopolitical events.\u00a0 Certainly our ValuEngine models are geared toward individual stock expected risk-return tradeoffs, not these other factors.\u00a0 We generally consider these to be exogenous factors that will create some short-term noise and volatility before the market returns to fundamentals.\u00a0 Another phrase we hate to use is that this time it may well be different, at least for some time to come.<\/p>\n

The Executive Branch of the mightiest nation in the world is now following an expansionist agenda that seems designed to attempt to keep the US and its allies safer while making certain that the US has continued access to \u201crare earth\u201d metals and expanding our ability to control petroleum supply lines.\u00a0 The reliance on continuing to build on the most advanced military capabilities in the world has also pushed prices higher for most stocks in the Aerospace and Defense Industries.<\/p>\n

To get a data-driven view of what has been happening, let\u2019s take a look at ETFs focused on GICS (General Industry Classification Standard \u2013 overwhelmingly preferred by US institutional investors) sectors and industries.\u00a0 The ETF sponsor that dominates this category is State Street SPDRs.\u00a0 Isolating these ETFs allows us to make an apples-vs. apples comparison between sector and subsector ETFs. Let\u2019s take a look at the top 10 performing ETFs during the past 12 months with more than $1 Billion in assets.<\/p>\n

Current ValuEngine reports on all covered 5000+ stocks and ETFs can be viewed<\/b> HERE<\/b><\/a><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\nTicker<\/b><\/td>\nName<\/b><\/td>\nAsset ($B)<\/b><\/td>\nYTD Price Change<\/strong><\/td>\n1 Year Returns<\/strong><\/td>\n3 Year Returns<\/strong><\/td>\n1 Year FF \u00a0 \u00a0 ($ M)<\/strong><\/td>\nDiv. Yld %<\/strong><\/td>\nExp. Ratio<\/strong><\/td>\nVE Rating<\/b><\/td>\n<\/tr>\n
1<\/td>\nXME<\/td>\nState Street SPDR S&P Metals & Mining ETF<\/td>\n4.24<\/td>\n8.15%<\/td>\n101.03%<\/b><\/td>\n27.15%<\/td>\n1281<\/td>\n0.4%<\/td>\n0.35%<\/td>\n5<\/td>\n<\/tr>\n
2<\/td>\nXAR<\/td>\nState Street SPDR S&P Aerospace & Defense ETF<\/td>\n6.26<\/td>\n16.95%<\/td>\n76.08%<\/td>\n33.91%<\/b><\/td>\n1487<\/td>\n0.3%<\/td>\n0.35%<\/td>\n5<\/td>\n<\/tr>\n
3<\/td>\nXSD<\/td>\nState Street SPDR S&P Semiconductor ETF<\/td>\n1.59<\/td>\n2.96%<\/td>\n49.00%<\/td>\n18.07%<\/td>\n-68<\/td>\n0.3%<\/td>\n0.35%<\/td>\n4<\/td>\n<\/tr>\n
4<\/td>\nXBI<\/td>\nState Street SPDR S&P Biotech ETF<\/td>\n7.65<\/td>\n4.26%<\/td>\n46.15%<\/td>\n16.31%<\/td>\n-177<\/td>\n0.4%<\/td>\n0.35%<\/td>\n3<\/td>\n<\/tr>\n
5<\/td>\nGNR<\/td>\nState Street SPDR S&P Global Natural Resources ETF<\/td>\n4.72<\/td>\n17.12%<\/td>\n41.63%<\/td>\n11.79%<\/td>\n809<\/td>\n2.4%<\/b><\/td>\n0.40%<\/td>\nNR<\/td>\n<\/tr>\n
6<\/td>\nXOP<\/td>\nState Street SPDR S&P Oil & Gas Exploration & Production ETF<\/td>\n3.15<\/td>\n28.16%<\/td>\n35.44%<\/td>\n9.25%<\/td>\n496<\/td>\n2.0%<\/td>\n0.35%<\/td>\n4<\/td>\n<\/tr>\n
7<\/td>\nXLE<\/td>\nState Street SPDR Energy ETF<\/td>\n39.29<\/td>\n25.97%<\/b><\/td>\n32.56%<\/td>\n13.50%<\/td>\n-109<\/td>\n2.3%<\/td>\n0.08%<\/b><\/td>\n4<\/td>\n<\/tr>\n
8<\/td>\nXLI<\/td>\nState Street Industrial Select Sector SPDR ETF<\/td>\n29.65<\/td>\n10.20%<\/td>\n29.08%<\/td>\n20.46%<\/td>\n3238<\/b><\/td>\n1.2%<\/td>\n0.08%<\/b><\/td>\n4<\/td>\n<\/tr>\n
9<\/td>\nXLK<\/td>\nState Street Technology Select Sector SPDR ETF<\/td>\n86.90<\/td>\n-2.92%<\/td>\n28.61%<\/td>\n26.74%<\/td>\n1231<\/td>\n0.5%<\/td>\n0.08%<\/b><\/td>\n5<\/td>\n<\/tr>\n
10<\/td>\nXLU<\/td>\nState Street Utilities Select Sector SPDR ETF<\/td>\n24.44<\/td>\n9.74%<\/td>\n24.27%<\/td>\n15.78%<\/td>\n3032<\/td>\n2.2%<\/td>\n0.08%<\/b><\/td>\n3<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Focusing on 1-year returns, we document once more the price explosions in precious metals and the companies that mine them.\u00a0 However, on a year-to-date basis, sectors more directly related to the US-initiated global conflicts have generated even higher gains.\u00a0 Just a week ago, XAR<\/b>, the State Street SPDR S&P Aerospace & Defense ETF, had been the year-to-date leader among these top 10 ETFs. It has been made clear that government spending on technology for the US War Department\u00a0 (formerly DoD) will increase given commitment to regime-changing agendas.\u00a0 Its 12-month return of more than 76% was second only to Precious Metals ETF, XME<\/b>.\u00a0 Both continue to get our highest rating of 5 <\/b>(Strong Buy).<\/p>\n

In this quickly changing political world accompanied by high market volatility, returns and leadership changes very quickly.\u00a0 However, two of the ETFs now in the top 10 blew past Metals and Mining to seize the lead for year-to-date performance.\u00a0 These two are XOP, <\/b>State Street SPDR S&P Oil & Gas Exploration & Production ETF and XLE, <\/b>State Street SPDR Energy ETF.\u00a0 Both ETFs are rated 4 <\/b>(Buy).<\/p>\n

Free Trial: Research on over 5,000 stocks and 700 ETFs <\/b>HERE<\/b><\/a><\/p>\n

Looking inside XLE<\/b>, Five of its top holdings are rated 4 <\/b>and one is rated 5 <\/b>(Strong Buy).\u00a0 This includes the three buy-rated companies that are also in the top ten holdings by market cap weight in XOP<\/b>. Those stocks are:\u00a0<\/b><\/p>\n