Funds Industry Takes on Trump

by on May 04, 2017

Since the surprise election of Donald Trump, mutual fund firms have scrambled to reassure both advisors and investors that the outcome will not have an immediate impact on markets. Immediately following election night, firms like Franklin Templeton and PIMCO analyzed how Trump’s campaign promises could affect investor portfolios and equity markets. Firms anticipated that a Republican-controlled Congress could make Trump’s promises regarding trade, immigration and tax reform a reality. In the three months following Inauguration Day, Trump’s executive orders and actions have become a ubiquitous part of the news cycle.

Franklin Templeton Promotion

Advisors and clients have a vested interest in the volatility that’s expected from policy changes. As a result, firms in the Corporate Insight coverage group have released a variety of commentaries, microsites, infographics and videos to help clients understand post-election implications. Here, we focus on four firms that tackle Trump’s policies on globalization, immigration, tax reform and regulations:

OppenheimerFunds released a microsite that promotes the 2017 Outlook report examining themes in the global economy and in asset allocation. Specifically, the firm offers an interactive graph that illustrates the benefits and risks a Trump administration may have on the economy. The normal distribution curve highlights the left-tail risks, base case and right-tail risks. Investors can highlight each tail to view key points. Oppenheimer suggests that protectionist policies may provoke a trade war, while pulled trade deals and high tariffs may destabilize financial markets. Anticipated plans to ease regulations, increase infrastructure spending and reform taxes are viewed as more promising for the economy.

OppenheimerFunds Graph Feature

Allianz Global and Federated both touched on Trump’s populist rhetoric and promises to bring back jobs to this country. Allianz released a page that features four videos discussing post-election volatility and the future of globalization. In a conversation with Bloomberg, Allianz CEO Andreas Utermann argues that de-globalization with trade barriers and tariffs puts pressure on margins, increases prices for consumers and decreases corporate profits. Perhaps in response to Trump’s statement that NAFTA is the “worst trade deal ever,” Federated released an infographic that highlights how Mexico is the second largest export trading partner in four Trump-voting states. The infographic illustrates how Michigan, Ohio, Pennsylvania and Wisconsin send billions of dollars’ worth of exports to Mexico and estimates the number of jobs tied to Mexican trade.

Federated Infographic

J.P. Morgan released a page—100 Days of Change—that examines the portfolio implications of Trump’s policy agenda through bulletins, podcasts and videos. The first commentary, The Importance of Immigration, discusses Trump’s executive orders regarding travel bans. The article suggests that fewer illegal immigrants could lead to labor shortages and higher wages, particularly in the service, agriculture and construction industries. The article suggests that the consequences of reduced legal immigration would be severe, largely due to the retirement of baby boomers and a skills gap in millennials.

J.P. Morgan 100 Days of Change Page

For more information on this topic from the insurance industry perspective, see Megan Rafferty’s blog post, Insurers Weigh In on Trump: Life Insurance Firms Respond to Election Outcome, Look Ahead.