Election year: The Impact on Institutional Investors

Executive summary:

  • We believe the state of the U.S. economy will play a large role in determining which political party does well in November’s elections.
  • Markets generally prefer gridlocked results—where neither political party wins a clear majority—as an election outcome. After all, a gridlocked legislative body means politicians can't make decisions—which means they can't make bad decisions.
  • While the upcoming elections may create volatility, the fundamentals of investing won't change.

Do presidents and prime ministers make economies? Or do economies make presidents and prime ministers? 2024 is a year of significant elections, with more voters heading to the polls worldwide than ever before. At least 64 countries will hold major elections. So, what does that mean for institutional investors?

Mark Eibel, director of client investment strategies at Russell Investments, recently led a panel discussion to separate the noise from the meaningful news and uncover how election results may impact portfolios. On the panel were Andrew Pease, chief investment strategist at Russell Investments and Kaspar Hense, senior portfolio manager of investment grade credit at RBC BlueBay Asset Management.

During the discussion, they explored:

  • Monetary policies and regulations: Which parties are likelier to try to juice the economy with fiscal stimulus? Which might be more conservative? And how much impact can the winners actually have?
  • Regulatory changes: Legislative changes typically come from Congress. But what about regulations? Which party is more likely to loosen the reins? And would looser regulations be a good thing for long-term investors?
  • The pace of the energy transition: How might the different parties around the world impact climate-and-energy-driven sectors? What might that mean for inflation?
  • Navigating the rest of 2024: Although the elections may be many months off, what kind of near-term volatility may occur between now and then?