Talking Point  

Advisers split on consequences of US election for portfolios

Advisers split on consequences of US election for portfolios
 Pexels/Sharefaith

Advisers are split on the consequences of the US election outcome for client portfolios, according to the latest FTAdviser poll.  

The election of Joe Biden as US president has made US equities more attractive for 42 per cent of those advisers surveyed, while the outcome is either negative or makes no difference to the attractiveness of the US market at this time.

Mr Biden has pledged to introduce a wave of extra government spending as a way to potentially boost growth, but Mr Biden’s ability to do this at the scale mentioned in his campaign is constrained by his party not having won control of the Senate. 

Mr Biden had spoken, during his campaign, of aiming for a stimulus package of $2trn, but a figure of between $500bn and $1trn is now more likely. 

The pandemic has also resulted in the US Federal Reserve, that country’s central bank, cutting interest rates to record low levels. 

 A combination of some fiscal stimulus and the monetary policy response would typically be expected to create inflation in an economy, which would normally be expected to be positive for equities and bad for bonds.

If inflation and growth rise at a particularly fast rate, this would likely lead to growth stocks outperforming relative to value stocks.    

david.thorpe@ft.com