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Trump or Clinton – how should you position your portfolio?

José Luís Borges, head of institutional portfolios at BPI Gestao de Activos in Lisbon, had a slight overweight to equities before the Brexit vote, as he believed the UK was poised to vote in favour of EU membership. But this time he is taking no chances either.

“We have retained a neutral allocation in the run-up to the elections but we are not underweight equities, because we think that the best long-term returns are going to come from this asset class regardless of the election result,” says Borges, who also wants to make sure he is not missing out completely on the relief rally that would likely follow a Clinton victory.

Fed to the rescue?

In the longer run, other assets than gold could also benefit from a Trump win, not least because the Fed is likely to take a more dovish stance if that happens. “Central banks seem to have an answer to everything. We are already hearing that the Fed won’t raise rates if Trump wins, and are more likely to if Hillary does”, said Neuberger Berman’s Marks. “The first order effect of the elections is of course negative, but the second order effect could be positive for asset prices.”

A Trump win is currently not priced in, even though the S&P 500 experienced a nine-day consecutive loss streak until Friday. Markets are likely to fall in case the 9-11 scenario (election results will be announced on the ninth of November) materialises. But investors may do well snapping up sold off assets once things calm down a bit. It worked with Brexit. 

Part of the Bonhill Group.