On November 16th Goldman Sachs Group Inc. analyst Charles Himmelberg raised his team’s growth forecast for the U.S. in 2018 to 4%. However, this was dependent upon the Trump administration’s ability to push through its proposed tax reform that will see corporate taxes drop from 35% to 20%. There is broad support for tax reform within the GOP ranks, but there continue to be disagreements over individual rates within the new code.
The Vanguard S&P 500 Index ETF (TSX:VFV) allows Canadian investors to track the top 500 companies south of the border. The ETF was up 0.46% in afternoon trading on November 21st and has increased 10.8% in 2017. The index has climbed 140% since its inception on November 16, 2012. For those betting on improved U.S. growth, this is a great add.
For those looking to dip into this ETF, the chief risk is the failure of this administration to pass aforementioned tax reform. Goldman Sachs put odds at 80% that tax reform is passed by early 2018. Ahead of the 2018 midterms, the pressure is enormous on Republican lawmakers and the Trump administration to produce a legislative achievement.
All things considered, investors should be betting on tax reform getting through. Whether or not it garners popular support and actually produces electoral success for the GOP is another story. The Vanguard S&P 500 Index ETF is a solid buy even after ripping off big gains in 2017.