Insights

US Elections: Investing Amid Political Risk

10 September 2020

Executive Summary

Polls suggest the general mood in the US is gloomy and the electorate disapproving Trump on many key election issues, according to RealClearPolitics. Media sentiment suggests that Trump is losing ground against Biden both in the entire country and in key swing states.

There is some evidence that sectors (particularly Tech) appear to be more sensitive around the election date than cap factors and smart beta.

Investors seem to position their portfolios cautiously before elections and only venture slowly back to equities afterwards.

Macro momentum, rather than the current state of the economy, is likely to be important in the election and Trump is currently trailing past re-election winners on key indicators.

Emerging Policy Themes for 2020 Presidential Election

Potential Outcomes

Scenario A: Clean Democratic Sweep: We favour Fossil Fuel Free/ESG, Infrastructure, Health Care, dividends.
Scenario B: Democratic President, Republican Senate: We favour Fossil Fuel Free/ESG, Infrastructure, dividends, Discretionary.
Scenario C: A disputed Biden or Trump victory: We favour low volatility, Staples, Utilities.
Scenario D: Trump is Re-Elected, Status Quo: We favour Infrastructure, Utilities, Oil & Gas, and mid/small caps.

Marketing communication

Investing involves risk including the risk of loss of principal.

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The views expressed in this material are the views of Daniel Ung through the period ended 1 September 2020 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

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3231074.1.1.GBL.RTL

Exp. Date: 30/09/2021

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