More Results

    From Sectors and Smart Beta to Fixed Income, SPDR Exchange Traded Funds (ETFs) give you wide access to diverse investment opportunities. Find out more.

    Okay
    Insights
    Publications   •   Strategy Espresso

    Positioning for US Equity Performance Beyond the Election

    It’s probably almost all over

    While the level of uncertainty surrounding the US presidential election may have narrowed in recent weeks, there are still many investors who, given the upset of the 2016 election, have preferred to sit out the campaign. History tells us that, on average, US equities rise in the month after the election, although the strength of that rise has varied. In the table below we show returns over the last 70 years under different political scenarios.

    S&P 500 Post-Election Average Performance (1948 - 2017, Cumulative %)

    Assuming an uncontested election result, and therefore political certainty, investors may want to ensure their US equities holdings are at least up to weight, especially as any announcement of a successful vaccine or new fiscal stimulus package could cause a sharp bounce in the markets.

    The US remains our preferred region

    We believe US equities continue to offer the safest haven in the near term (relative to other regions). US equities are supported by the bias towards corporate quality, in particular balance sheet strength, which we believe is helpful in the more difficult economic environment. There are also important defensive benefits from the country’s huge domestic market and diversified economy as well as the composition of its corporate structure.

    US employment has continued to rebound while consumers remain resilient as evidenced by the strong consumer confidence index and positive retail sales. Monetary policy remains accommodative and, while additional fiscal stimulus has disappointed so far, there remains optimism that a package can be agreed upon after the election. Outside the US, the picture is a little more mixed.

    In the longer term, US equities continue to look like a relatively attractive asset class. There has been a strengthening of structural, technological trends during the COVID-19 crisis that could benefit many industries. There is also a reasonable amount of slack in the economy, which means it could run at a faster pace than would normally be expected over next few years. Furthermore, there is an opportunity for companies to increase efficiency through a greater reliance on technology.

    From a valuation perspective, historically low bond yields offer a cushion against elevated uncertainty, allowing companies to access financing more easily.

    The US is a large country with a lot of choice

    SPDR has a wide range of funds providing exposure to US equities, with a choice on size, factor, ESG and sector. Here we highlight a few of the options:

    The big beast: S&P 500

    The S&P 500 has recovered strongly from the lows of March, but the strength of corporates, supported by the factors mentioned earlier should help further gains. In the short term, State Street Global Advisors prefers large cap over small cap equities, given their quality bias and performance being helped by the large weighting in Technology companies. Structural growth trends assessed by all the FAANGs, including those in technology, should continue to drive earnings and sales expectations with contributory momentum and macro factors offsetting any concern over valuations.

    Playing it down the middle: S&P 400

    The US mid-cap index has much greater cyclical exposure than the S&P 500, an example being 18% weight to Industrials, containing engineers and machinery manufacturers that could meet with higher demand on any fiscal package targeting physical infrastructure. According to State Street Global Advisors, mid-cap stocks can occupy the sweet spot in the market with higher earnings growth, although accompanied by higher volatility (though not as high as with small caps).

    Closer to the action: Russell 2000

    In the near term, an improvement in the relative health of small cap balance sheets, when considering operating earnings versus free-cash-flow, has helped the Russell 2000 look more appealing than earlier in the COVID-19 crisis. Looking out three to five years, we forecast higher returns from small caps than large or mid caps (6.1% versus 5.6% for US large caps and 5.8% for mid caps); however, we would expect a higher standard deviation of returns.1

    Taking advantage of large dispersion of returns in sectors

    Sectors are often one of our favourite investment solutions, and never more so than when volatility driven by intra-sector dispersion is high.

    Each election scenario poses different implications for each sector; please refer to our recent article for a full summary. Some of these implications may well be priced in before the election result is announced, but the speed of new legislation may not take the normal path given the importance of first addressing health and related economic problems. There will be opportunities in terms of over-reaction, which we cannot predict.

    In the Q4 Sector Compass, our Sector Picks consider not only the possible impacts of the election, but also the reaction to other growth drivers in the market and possible avoidance of certain risks. The sectors we considered were Utilities, with its potential benefits from renewable energy; Health Care, given demand for COVID-19 treatments; and Technology, in light of its importance in facilitating our working and social lives in the current environment.

    How to play these themes:

    SPDR offers a range of ETFs that allow investors to access exposure that can help them to position around the US presidential election. To learn more about these ETFs, and to view full performance histories, please follow the links below:

    Share
    Flows

    European-Domicilied ETP Segment Flows (Top/Bottom 5, $mn)

    European-Domiciled ETP Asset Category Flows ($mn)

    Sources: Bloomberg Finance L.P., for the period 22-29 October 2020. Flows are as of date indicated and should not be relied upon as current thereafter.

    Importante information concernant les risques:

     

    La plateforme SPDR ETF est l'outil développé par State Street Global Advisers pour traiter les «exchange traded funds» (ci après «ETFs»; elle se compose de fonds autorisés par les Autorités de Surveillance européennes comme sociétés d'investissement OPCVM ouverts. Il est possible que les SPDR ETFs ne soient pas disponibles ou ne vous conviennent pas.

     

    Les ETFs sont négociés comme des actions; ils sont exposés aux risques de placement, fluctuent selon les conditions du marché et peuvent être traités à des cours supérieurs ou inférieurs à leur valeur nette d'inventaire. Les commissions de courtage et les coûts inhérents aux ETF impliquent une réduction des rendements.

     

    Les fluctuations des taux de change peuvent avoir un effet défavorable sur la valeur, le cours ou les revenus d'un fonds. Rien ne permet en outre de garantir qu'un ETF réalisera son objectif de placement.

     

    LES ACTIONS DES COMPARTIMENTS DE LA SICAV SPDR® ETF, SSGA SPDR ETFS EUROPE I PLC ET SSGA SPDR ETFS EUROPE II PLC POURRAIENT CONSTITUTER UN INVESTISSEMENT NON DISPONIBLE POUR VOUS ET/OU NON ADAPTE A VOTRE SITUATION. LES INFORMATIONS CONTENUES SUR CE SITE NE SAURAIENT CONSTITUER UN CONSEIL EN INVESTISSEMENT. EN CAS DE DOUTE, L'AVIS D'UN CONSEIL INDEPENDANT DOIT ETRE RECHERCHE PAR L'UTILISATEUR. AUCUNE INFORMATION ET AUCUNE OPINION FIGURANT SUR CE SITE NE SAURAIT CONSTITUER UNE OFFRE, UNE SOLLICITATION OU UN DEMARCHAGE EN VUE DE LA SOUSCRIPTION, DE L'ACHAT OU DE LA VENTE DES ACTIONS DES FONDS OU DE TOUT AUTRE INSTRUMENT FINANCIER.

     

    Standard & Poor's®, S&P® et SPDR® sont des marques déposées de Standard & Poor's Financial Services LLC (S&P) ; Dow Jones est une marque déposée de Dow Jones Trademark Holdings LLC (Dow Jones), et ces marques ont été concédées sous licence d'utilisation à S&P Dow Jones Indices LLC (SPDJI) et pour octroi de sous-licences à certaines fins par State Street Corporation. Les produits financiers de State Street Corporation ne sauraient être financés, vendus ou promus par SPDJI, Dow Jones, S&P, leurs sociétés affiliées respectives et, et nulle desdites parties ne saurait faire valoir l'opportunité d'investir dans le ou lesdits produits, ni ne saurait engager une quelconque responsabilité à cet égard, en ce compris les erreurs, omissions ou interruptions rattachées à quelque indice que ce soit.

     

    Les SPDR ETFs ne peuvent être offerts et vendus que dans les juridictions où cela est autorisé conformément aux dispositions légales en vigueur.


    Informations relatives au Mexique

     

    Les informations figurant dans ce document ne constituent en aucun cas une offre de titres financiers et ne sauraient être considérées comme telles. Les Fonds mentionnés dans ce document ne sont et ne seront pas agréés en vertu de la Mexican Securities Market Law (Ley del Mercado de Valores). Ils ne peuvent faire l’objet d’aucune offre publique, pas plus qu’ils  ne peuvent être vendus sur le territoire des États-Unis d’Amérique. Il est interdit de distribuer publiquement les documents informatifs liés aux fonds susmentionnés sur le territoire du Mexique, tout comme il est interdit d’y échanger des parts des Fonds.

     

    Avant tout investissement, vous devriez vous procurer et lire le prospectus et le DICI traitant des SPDR ETFs. Les personnes résidant dans les pays où les SPDR ETFs sont autorisés à la vente trouveront en outre de plus amples informations ainsi que le prospectus/DICI comportant des détails sur les caractéristiques, les coûts et les risques des SPDR ETFs à l'adresse vendita sul sito SPDRs et auprès de l'agence SSGA locale.

    © 2021 %%State Street Corporation%%. Tous droits réservés.