How Firms Cover the Election

Kseniya Nadtochiy by on May 19, 2016

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As presumptive presidential nominees begin mobilizing their efforts for the general election, the most pressing issue for investors is how the stock market will react after November. Luckily, American Funds, MFS and OppenheimerFunds, a few firms in the Mutual Funds Monitor coverage group, offer some perspective, collectively emphasizing investments depend much more on the market as a whole than who holds the White House.

American Funds reviews past U.S. presidential elections and annual returns in its Elections Come and Go. Results Last a Lifetime PDF to determine investment success depends on the state of the American economy rather than which candidate or party is elected. The document suggests that successful long-term investors rely on time rather than timing and advises investors to not be discouraged by political parties.

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MFS offers another historical perspective on the election, focusing on the performance of the S&P 500 Index based on the incumbent party. Primaries, Caucuses and Elections – Oh My! PDF demonstrates how differences in political control in Congress and the White House affect returns. Between the election years of 1900 through 2012, the markets performed better when the incumbent party won the election, regardless of affiliation. The total annual returns, though, were highest under a Democratic president and a split Congress. Statistics notwithstanding, MFS stresses that investors should focus on long-term trends and global competition rather than hype surrounding election years.

OppenheimerFunds provides the most comprehensive analysis of the election with a dedicated page— Election 2016 in Perspective. The page features a video, an interactive Presidential Election Timeline and six commentaries that focus on key topics for the 2016 election. The timeline allows users to adjust to key dates in the 2016 election cycle to reveal the days until election from that date, the primaries completed and the percentage of delegates committed to both parties. While OppenheimerFunds tackles a variety of election topics such as campaign rhetoric, key issues and political gridlock, the firm stresses the same fundamental advice for investors as American Funds and MFS: the elected party and president have little impact on the performance of stocks. Historical evidence, OppenheimerFunds’ commentaries suggest, doesn’t show any correlation between elected party and returns of the Dow Jones Industrial Average. The firm suggests that investors should focus on consumers and businesses rather than who controls Capitol Hill.

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As the U.S. prepares to elect a new president in November, firms advise investors to stay focused on their long-term financial goals and strategies. Historical evidence suggests that market performance does not favor one party over the other, rather, the economy affects the political outcome. The best thing investors can do is to avoid the campaign drama and always be on the lookout for new opportunities.