What does the US election result mean to me?

You may be wondering how the election of Donald Trump may impact your investment portfolio?

Often the biggest risk in situations like this is reacting impulsively to the fears stoked by headlines in the media. But I’d like to remind you that politics and investing are two distinctly different areas, and we will continue to manage your portfolios to ensure they are diversified and robust.

US Election

Donald Trump has won the Presidency and the Senate, which on paper gives him a clear mandate to enact his fiscal and monetary policies. The House of Representatives remains up for grabs which may curb his ability to deliver on all his plans – depending on how the outcome lands.

The market reaction in the immediate aftermath of the election is commensurate with Trump’s key policies of anti-immigration and protectionism. The US dollar has rallied as investors price in the possibility of trade tariffs. US government bond yields have risen (meaning prices have fallen) driven by a higher probability of inflation as the US labor force shrinks.

However, we are mindful that there is huge uncertainty surrounding the actual policies President Trump might get behind and these moves may reverse.

Taking a Long-Term View

We will continue to monitor proceedings and will keep you informed if anything material ensues. Regarding your portfolio, it is for circumstances like this that we take a diversified approach when managing money.  These portfolios have been constructed by the managers, including Lonsec, Morningstar or Black Rock to diversify across a number of asset classes, economies, companies and regions.

Your portfolios hold assets like financial stocks and broad equities that should perform well if inflation rises and growth backdrop consolidates. There are also positions like defensive equities and government bonds that should appreciate if the global economy loses momentum.

At the same time, the portfolios have avoided going “all in” on any potential outcome. Instead, your portfolios are robust and constructed so that they might be expected to perform well over the long run, come what may.

Last, we leave you with two key points.

1. In the face of political uncertainty, it is normal to question whether you should sell, hold or buy. To our eye, the answer is simple… manage risks, stay informed and—most importantly—stay the course.
2. Any turbulence in markets may create great opportunities to purchase assets that will add meaningfully to returns in the future.

We hope you find this perspective helpful and we’ll keep you updated as events evolve.  Please contact our office with any questions you may have.