US presidential election – Much ado about nothing

History suggests that presidential elections are not a significant driver of asset returns. That is, asset returns around elections are, on average, the same as returns outside of election windows. We expect this year to be no different.

What you will learn:

• Outcomes in which control of the presidency, House and Senate are divided are generally associated with higher returns for risk assets, while unified control favours defensive assets.
• Assets outperform when the incumbent president wins the election, and underperform when the incumbent loses the election.
• However, we find that these discrepancies fade once the economy is controlled for.