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ETF investors have long lamented the fact that there isn't a vehicle for tracking the CBOE Volatility Index [VIX]. The fact that it has rocketed from 25 to 50 in 2008 only makes matters worse.

Every asset class, even bonds (ex treasuries), has been beaten to smithereens. Not the VIX- it has knocked itself a double off the outfield wall.

Granted, the "fear index" is not an asset class per se. Nevertheless, its implications are astounding.

For example, I heard it mentioned that a VIX of 50 suggests that the S&P 500 might be expected to travel in a range of 500 points in a year. That's roughly a 50% gain or a 50% loss for U.S. stocks from today! (Let's hope the former takes the index back to its October 2007 highs in a year, however unlikely that may seem.)

Still, it is very likely that panic will pull back such that the VIX will fall. Even if the stock market traded for a time in a range of S&P 1000-S&P 1100, the VIX would drop back down into the 20s. In other words, I'd be a seller of volatility.

If volatility did decline rapidly, what ETFs might benefit? I'd have to believe that real estate investment trusts (REITs) would have the most reliable dividend payments of 5%. And with the recent carnage across all asset classes, Vanguard's REIT ETF (NYSEARCA:VNQ) is the most diverse way to get exposure.

With decreased volatility comes increased political certainty, and it appears that Obama may just have a lock on the Oval Office. The Giants did beat the Patriots in the Superbowl, and the "Maverick" could still pull it off, but the smart money might already be moving towards Obama-friendly choices.

Enter the PowerShares Dynamic Energy and Exploration Fund (NYSEARCA:PXE). On the surface, it may seem counter-intuitive to link a traditional energy exploration ETF with someone who originally opposed offshore drilling. In fact, the early money has favored green energy investments.

Yet most green energy ETFs show high multiples, even for growth companies. And that means one might wish to think a bit outside the box.

Keep in mind, Dems have already lifted the ban on offshore drilling. And any windfall tax profit program, should it pass through Congress (a big if), would be offset by the increased business that drillers can go after.

American citizens overwhelmingly favor drilling for more oil… and Obama now recognizes the shifting American sentiment. Even in a comprehensive energy independence plan, traditional non-renewable resources will be part of the picture.

The Dynamic Energy Exploration and Production Fund (PXE) is geared towards small- and mid-sized companies… not “Big Oil.” PXE represents smaller companies that have attractive price-to-book and attractive price-to-earnings. Helping established explorers of energy grow from smaller companies to bigger companies works in the Obama playbook, even as “windfall profit taxes” are talked about with “Big Oil.”

Want more ETFs for Obama and McCain? Here's a special feature that I recently put together.

Disclosure Statement: ETF Expertis a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.

Source: Real Estate ETFs: Vanguard's REIT ETF Should Benefit When Volatility Subsides