Our views on investing through election cycles


The 2020 U.S. federal, state, and local elections are about a year away. Yet some investors are already starting to wonder how they will impact their investments. This is natural. After all, the daily barrage of campaign promises, debates, and election polls makes it hard to ignore. This is further compounded by opinion pieces published in the news media, with investment professionals predicting how different candidates could impact stocks.

All this rhetoric can feel overwhelming. It’s why we focus on policy, not politics. Here’s how we think about it.

Our analysis and research help inform the investment decisions that we make in your account

First, a large part of what we do is to analyze different possibilities on policy and understand how they may impact economic growth and corporate earnings. Based on our thoughtful analysis and research, we can develop strategies that address these changes. For example, what if policy shifts impacted the outlook for certain large technology companies? We could emphasize different funds or investment managers that have less exposure to those names. Additionally, the U.S. stock fund managers that we select for your managed account could also change their investments. This might mean favoring tech stocks that have stronger fundamentals in the new environment. Similarly, what if there were changes to policies around global trade, or the tax code, that could affect the pace of U.S. economic growth? We would adjust the mix of investments in your account to reflect this new reality.

Patience and discipline can lead to better outcomes

Another key aspect of our approach is being patient and disciplined in making any investment changes in your account. For instance, we don’t seek to predict or guess the direction of future policy as the election season unfolds. That’s because policy details can vary significantly between what was promised on the campaign trail, to what gets passed. Moreover, changes to U.S. laws and regulations often take months or years to complete. Not everything changes the day after an election. By setting aside the noise and rhetoric throughout an election process, we can gain greater clarity on which policy changes could ultimately impact economic growth and corporate earnings. We believe that this prudent, thoughtful approach can lead to better outcomes for you.

In fact, over the last 30 years, we have helped investors like you navigate several election cycles and a changing U.S. policy landscape. For example, in June 2012 we learned that the tax code was going to change in early 2013 for some individuals. As a result, we adjusted our tax-smart investment strategies for many investors with taxable accounts to help improve their after-tax returns. More recently, when it became more evident that U.S. corporate tax rates would move lower in 2018, we believed that it would help boost U.S. corporate profits. We therefore emphasized U.S. stocks in client accounts, which led to strong performance across client accounts.

We remain focused on helping you reach your financial goals

The uncertainty and emotion that comes with elections and their implications for markets isn’t new. With each election cycle, there is passionate debate on managing the economy, taxes, international relations, health care, and many other areas. All of these are important. That’s why we are so vigilant in prudently managing your account. With rigorous research and thoughtful insights, we will seek to adjust your investments as policy evolves. Helping you reach your financial goals remains our number one priority.

If you have any questions or want to evaluate your plan, please call your advisor or team at 800-544-3455 who can work with you to ensure that you are properly invested to help meet your goals.