Q: I am concerned about the US political situation. Should Trump manage to win the upcoming election and the US loses its democracy, I fear that this will not be good for the financial markets. Do you know what the results were in other countries that elected far right political parties? I have a sizable portfolio that is almost 50% weighted to the US. I would like to know how to prepare for this possibility short of selling all our US investments. Thank you
5i Research Answer:
We caution on making decisions, particularly large portfolio decisions, based on politics or expected political outcomes. There are a lot of potential scenarios and paths all of this could take and even if certain leaders win, the failure of a democratic institution is likely the worst case scenario in those far ranging scenarios.
If concerned over political risks in the US, the easiest and potentially most effective solution would be to decrease exposure to that geography. Utilizing inverse etf's on the Nasdaq or S&P 500 could be another option but this might be more effective to utilize closer to the actual election.