From the voting booth
to your portfolio

Sep 19, 2016 / By BlackRock

As we head into the homestretch to the U.S. election, our experts discuss the potential repercussions – and opportunities – for investors.


Entering the homestretch to the
U.S. election

Judging by the frequency of questions we are asked these days about the implications of the upcoming U.S. election, it has become top of mind for many— if not most—investors. And for good reason: To say the least, this has been an unusual election in the United States and regardless of which candidate you support, we can all agree that the November election will be historic in many ways. With the election now entering the homestretch, the market will be closely following the political machinations in the United States.

Looking beyond the cycle

The long-term implications of either Hillary Clinton or Donald Trump winning will likely have less of an impact on the market than many investors are anticipating. If history is any guide, election results have had a relatively minimal impact on longer-term U.S. or global equity returns. What matters more: Growth, earnings, interest rates, inflation—and how Federal Reserve (Fed) policy responds to all of those.

Swing states

Over the short term, however, the election cycle can influence markets in unpredictable ways. Historically, volatility typically picks up in the month before a U.S. election. Given that markets have been unusually quiet the last several weeks, a spike in volatility could be unnerving.

Vulnerable incumbents

Should it occur, volatility is likely to persist across the broad market, but specific sectors may be particularly vulnerable or, conversely, offer some opportunity. Among those to be cautious on is health care. The sector has historically underperformed in election years, due in large part to concerns over pricing pressure. There could well be longer-term implications on policy changes, but any significant changes to the health care system will likely take years. Financials could be affected in a similar fashion.

Counting the ballots

There are likely still to be many twists and turns ahead in this most curious election, but a few trends have emerged. Partisanship and gridlock show no signs of ending. And policies of the next administration will be shaped by rising populist sentiment in the country, including opposition to global trade, which could be a headwind to growth. In short, uncertainty and volatility are unlikely to end on November 8.


Investing amid election uncertainty
Explore BlackRock's latest perspectives and analysis.
Investing amid election uncertainty
Explore BlackRock's latest perspectives and analysis.