The US presidential election has been sending shockwaves around the world since we woke up on 9th November to discover that once again, the pollsters had got it wrong and it was Donald Trump who will become America’s 45th president.
The news initially led to significant volatility in financial markets with investors offloading risky assets such as equities and commodities. At one point, pre-market trading showed the Dow Jones Industrial Average expected to open with roughly a 5% loss.
While markets were still trying to digest the news, President-elect Donald Trump gave his victory speech around the time European markets opened for trading. As he congratulated Hillary Clinton on a well-fought campaign, he sounded measured and calm and made the point that he would be putting America’s interests first while treating the rest of the world fairly. Markets were reassured by this speech and positivity returned as investors re-entered risky assets, boosting equity markets in particular.
Trump has now started assembling his team and clarifying some of his campaign rhetoric. It’s still too early to see exactly what a Trump presidency will look like, so markets are likely to remain volatile for some time yet, at least until his inauguration in January.
The NOW: Pensions Diversified Growth Fund (DGF) has not been immune from these volatile markets, and while the diversification within the portfolio has dampened the impact, we have a long way to go before things settle down. Potentially game-changing Italian, German, and French elections; a very slowly de-misting Brexit landscape; and a few Trump cards yet to be played, all combine to make the job of a fund manager a very tricky one indeed!
We believe that maintaining a well-diversified position is the best way to protect against – and benefit from – whatever the future may hold.
For more interesting facts on the impacts for investors of political and economic scenarios, please read more here.