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As the US presidential campaign reaches its final week, investors are questioning what impact the US election could have on markets.
For Sheema Shah, chief strategist at Principal Global Investors, there is no statistically significant correlation between the political party in office and equity market performance.
“Median equity returns were no better or worse when previous elections resulted in a Democratic sweep, Republican sweep, or a split government,” she said in a recent report.
“An example would be the belief that a Trump victory in 2016 would be negative for risk assets. In fact, until the Covid-19 crisis, President Trump presided over one of the best market performances in decades.”
For UBS Wealth Management, election results may have different consequences, but the defeat of the pandemic and subsequent economic recovery will still continue to be one of the main market drivers in any election outcome, according to a report from the firm.
“That said, a Blue Wave of status quo outcome would likely be modestly better for stocks because it would lead to larger fiscal support relative to a Biden win with a divided Congress.
“In a [Trump] status quo scenario, policy shifts would likely be fairly small. Fiscal stimulus that supports the recovery would likely come through, but it would be smaller than a Blue Wave outcome,” UBS Wealth said.
Against this backdrop, FSA asked Natalia Wolfstetter, director for manager research at Morningstar, to compare two US equity funds: the AB American Growth Portfolio and the BGF US Flexible Equity Fund.
|Size (Ucits / US-domiciled)||$6.05bn||$1.05bn|
|Inception (Ucits / US-domiciled)||1994||2002|
|Manager/s||Frank Caruso, John Fogarty, Vinay Thapar||Joseph Wolfe, Todd Burnside|
|Three-year cumulative return||62.21%||23.11%|
|Three-year annualised return||19.47||9.17|
|Three-year annualised alpha||9.23||0.28|
|Three-year annualised volatility||19.95||19.59|
|Morningstar analyst rating||Negative – Neutral||Negative – Neutral|
|Morningstar star rating||****||***|
|FE Crown fund rating||*****||**|
|OCF (clean share class)||1.17%||1.06%|
Source: Morningstar, FE Fundinfo