-
In the buildup to Labour’s first UK Budget for 14 years, it was widely expected that Chancellor Rachel Reeves would...
-
In September, we learned that consumer prices in the UK rose by 2.2% in the 12 months to August –...
-
Emerging markets experienced a remarkable surge in September, climbing over 7% in dollar terms, marking their strongest month since November...
-
In August, we learned that consumer prices in the UK rose by 2.2% in the 12 months to July –...
-
In March 2024, the FCA concluded a thematic review (TR24/1) into retirement income advice. Interestingly, within this review, they found that...
-
In July, we learned that consumer prices in the UK rose by 2.0% in the 12 months to June –...
-
You will have likely woken up to the news that global stock markets have fallen sharply. This appears to be because...
-
You will have seen that the Bank of England (BoE) cut interest rates by 0.25% today, the first cut since...
-
It is conventional wisdom that investment decisions are usually informed by an assessment of the investor’s willingness to take risk...
-
In June, we learned that consumer prices in the UK rose by 2.0% in the 12 months to May 2024,...
-
Following the overnight news that Keir Starmer and the Labour Party won a large majority in the UK General Election,...
-
As one may suspect, we are often among the first companies called by an investment business when a fund manager...
-
In May, we learned that consumer prices in the UK rose by 2.3% in the 12 months to April 2024,...
-
Yesterday, it was announced that the UK will hold a general election on July 4th 2024. We can understand how...
-
The conscious decision to invest in one asset class over another is probably the most important investment decision we will...
-
In April, we learned that consumer prices in the UK rose by 3.2% in the 12 months to March 2024,...
-
You will have likely seen the news on Saturday. On the back of these developments, we noted that equities in...
-
In March, we learned that consumer prices in the UK had risen by 3.4% in the 12 months to February...
-
February saw diverging fortunes in markets, with stocks performing well while fixed income markets were largely down. Within fixed income, it...
-
Chancellor Hunt unveiled this year’s Budget on Wednesday in the House of Commons. Background Since the next UK general election is likely...
-
One of the most common questions we receive from our clients revolves is whether to remain in cash or transition...
-
The “Magnificent Seven” Stocks - Our View and Portfolio Exposure – Fundhouse Adviser Insights6th March 2024The concentration in the S&P 500 of just seven names – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla is...
-
In December, the annual level of UK Consumer Price Inflation rose to 4%, up from 3.9% in November (with a...
-
In November, the annual level of UK Consumer Price Inflation fell to 3.9%, down from 4.6% in October. It is...
-
November saw positive news on inflation – UK CPI data for October fell to 4.6%, a notable drop from 6.7%...
-
On Tuesday, the FCA released a 212-page Policy Statement on Sustainability Disclosure Requirements (SDR) & Investment Labels. These new rules will...
-
On Wednesday, Chancellor Hunt delivered an ‘Autumn Statement’ to give Parliament an economic update and announce new policies – “110...
-
Having seen painful double-digit inflation in late 2022, it was something of a relief in October to see UK inflation...
-
At Fundhouse (UK), we help our clients avoid pitfalls when choosing funds. Fundhouse CIO Joe Wiggins investigates why following the...
-
At Fundhouse, we dig deeper into the data to make better investment decisions for our clients. Have UK equity fund managers...
-
2022 has been an incredibly difficult year for investors. Not only have we seen steep declines in equity markets, but...
-
As a UK citizen, it is certainly worrying that we have our fourth Chancellor and (soon to be) third prime...
-
The UK commercial property market is facing a torrid environment. Not only is the economic outlook bleak; but rising interest...
-
Over the years at Fundhouse (UK), we’ve spoken to dozens of #assetmanagement firms undergoing corporate change. Today, we share insights on...
-
Based on years of observation and bitter, painful experience; here are my thoughts on the ten most significant mistakes made...
-
At Fundhouse (UK), we use our own algorithms to analyse trading patterns, giving our clients greater #investmentclarity about the funds...
-
At Fundhouse (UK), we monitor the fund universe for signs of #liquidity issues, to give our clients better #InvestmentClarity. Today, we...
-
At Fundhouse (UK) we’ve been building a #greenwashing detector to give our clients greater #investmentclarity. We’ve uncovered a number of insights...
-
In today’s blog, we look back at the many meetings that we have had with fund groups discussing ESG. Although...
-
The market has become counterintuitive: in a strongly rising market across almost all asset classes, we find expensive has beaten...
-
As part of our manager research process for a given fund, we will evaluate the corporate entity employing the investment...
-
In this article, we explore whether there is persistency in tactical asset allocation skill, by evaluating the evidence we have...
-
In this article, we discuss how the historic low yields we are seeing in credit markets today does not seem...
Navigating The Investment Landscape Amidst The Upcoming US Elections
|
Home » Published: 22nd July 2024 This Article was Written by: Chris Proudfoot - Fundhouse |
The world of politics took a surprising turn over the weekend, as we learnt that US President Joe Biden has chosen not to run for re-election, instead endorsing Vice President Kamala Harris.
This unexpected move sets a significant precedent in the upcoming US election, which is a leadership race closely watched by global investors. Such a shift so late in the game may bring about concerns for investors. To this end, we aim to shed light on how the upcoming US election is factoring into our portfolio construction and asset allocation decisions. The short answer is very little.
We do not base our investment decisions on geopolitical or macroeconomic forecasts. While an event such as a presidential election can undoubtedly impact markets, forecasting the outcome accurately and positioning a portfolio to benefit from it is extremely difficult to do and has a very low chance of success. Today, we hold an underweight (relative to a market index) to US equities in our model portfolios, but this is a decision based on long-term valuations and fundamentals rather than an expression of any view as to who might win the election.
Consider the performance of the US stock market during the tenure of the last eight US presidents. As shown below, despite the immediate effect of elections on stock market performance, there’s a positive trend in the long run. Performance has tended to be strong regardless of the winning party, excluding that of George Bush Jr. In this instance, the period of his presidency contained two major bear markets (the dot com bubble and the Global Financial Crisis), which cannot be attributed directly to his policies.
Source: Financial Express, up until 23rd May 2024. The above are per annum in sterling and are based on the performance of a peer group of US equity fund managers, known as the Investment Association Sector.
We have also observed surprising or even contrary stock market performance when contextualized within incumbent policies. For example, renewable energy stocks performed better under Republican leadership (Trump) than under Democratic leadership (Biden), contrasting expected political support, while the opposite was true for oil and gas companies. While there are clear reasons for the strong performance of oil (the start of Russia-Ukraine war in 2022 being the obvious one), it is an example of a situation where policy doesn’t translate into the expected performance outcome.
Moreover, the White House’s occupant isn’t the sole determinant of future US government policy. The control of the Senate and the House of Representatives, too, play a pivotal role. However, studies show no significant relationship between party power and market performance, even in situations where one party has full control.
While elections might ruffle the market’s feathers in the short term, we focus on what is knowable—tilting portfolios towards assets that look cheap to us today because the price we pay today is the most important driver of future return. We stick to our process, build diversified portfolios, and monitor markets for potential opportunities that may well arise in the aftermath of such events.
Speak to the team: mps@fundhouse.co.uk.
Fundhouse is the trading name of Fundhouse Bespoke Limited. Fundhouse provides investment management services to professional clients and does not provide financial advice. Importantly, this note does not represent investment advice and any reader should always speak to their financial adviser before making any investment decisions. Please note that the value of any investment may go down as well as up and you may lose capital when investing and the value of your investments may not always increase. Please ensure that you are comfortable bearing financial losses and that you are comfortable taking a long-term investment view of five years or more.