Investors mull portfolio shift on eve of US election

Seven in 10 global investors are considering changing their portfolio ahead of the poll. 

Investors are considering weighting their portfolios more heavily towards healthcare, 5G and a green recovery as the US prepares for its presidential election.

UBS’s quarterly Investor Sentiment survey found that 72% of investors globally are considering a shift in holdings ahead of the vote on 3 November.

The survey of more than 4,000 investors and business owners in 14 global markets, conducted in late September and early October, also found that 62% will make additional changes based on the result.

The majority were considering extra allocations to the healthcare theme, at 66% of respondents, while 62% had thought of backing 5G networks and 56% were looking at investing in a green recovery.

The search for yield remained a big theme among the investors polled, with almost half saying they wanted to capture more yield in their portfolios over the next six months. Meanwhile, 29% said their aim was to reduce risk in portfolios.

• US election: will US equities get a government spending boost?
• US presidential election: how Trump and Biden will affect stock markets
• Smithson Investment Trust: tactics to play US election

Optimism grows

By market, investors in the US saw their optimism on the short-term economic outlook increase. Half of investors said they were optimistic on the economy, up from 41% three months earlier, with 55% optimistic on stocks, up from 44%. Of global investors, 49% view the US as an attractive market in which to invest, the highest across any one region.

In Europe, investors showed above-average optimism on their own economy for the next 12 months. Around 58% were optimistic compared to 55% of global investors. Compared to their international peers, European investors were more likely to be planning to adjust their portfolios post-election, at 65%. 

“Amid uncertainty over the US election and Covid-19, investors appear to be more positive on their own region than on the world at large,” says Iqbal Khan, co-president of UBS Global Wealth Management. “In the period surrounding the election, we believe they should diversify globally and avoid falling prey to their own home bias.”

• Take control of your retirement planning with our award-winning, low-cost Self-Invested Personal Pension (SIPP)

Some 56 million US voters have already cast their ballots as mail-in voting grows in popularity during this election due to Covid-19. Data suggests this election could have the highest rate of voter turnout since 1908.

At this stage, markets are pricing in the likelihood of a Democrat victory in November’s election, with Joe Biden winning the presidency and his party taking control of the Senate. Experts warn that this could mean large tax increases and generally tougher regulation, including for banks. Among the sectors that are expected to benefit from a Biden full sweep are infrastructure and consumer discretionary.