The uncertainty leading up to the presidential election often makes investors nervous, with some worrying about the expected rematch between President Biden and former President Trump this fall.
Financial services giant TIAA told FOX Business that as Super Tuesday approaches, many clients are asking its wealth management team whether they should make changes to their portfolios.
“Clients are generally very concerned about the political climate we’re in,” Niladri “Neil” Mukherjee, chief investment officer of TIAA’s wealth management team, said in an interview. “And normally this concern happens every four years, so it’s not surprising at all. There’s always political uncertainty, but this year, more than I’ve ever seen in my career, that uncertainty… seems to be increasing a little.”
To answer customers’ questions, Mukherjee conducted research dating back to 1928. That data may provide some comfort to investors.
Over the past 24 presidential elections, Mukherjee found that the return of a standard 60/40 portfolio, which invests 60% in stocks and 40% in bonds, has not fluctuated significantly, with a total return of 8.7% in election years and They found that in other years it was 8.5%. – Election year.
In fact, since 1928, there have only been four presidential years with negative profits, and they were all caused by significant and disruptive events such as the Great Depression, World War II, the bursting of the tech bubble, and the Great Recession. He discovered what happened during the.
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Another encouraging finding from Mr. Mukherjee’s research is that in each of the president’s 11 years, returns were positive in January (confirmed in 2024), but the rest of the year the market rose. It means that it was.
He says that statistics aside, averages are real and vary from cycle to cycle. However, the general idea is that although markets are more volatile during election periods, they tend to be pushed forward and produce decent returns on average.
“What we tell our clients is not to focus too much on the election and political noise,” Mukherjee said. “Focus on the other fundamental factors that drive markets as always: interest rates, corporate earnings, monetary policy, Fed actions, and obviously economic growth.”
