2016 Post-election Realities: Not Only Numbers

November 9, 2016

In the aftermath of the surprising victory by Donald Trump, the investment team has been connecting with experts this morning to discuss the financial and political implications of the election. Rest assured; our primary task has been to stay mentally prepared for this possibility and to remain vigilant on your behalf.

Specifics for today: U.S. equity markets have rebounded quite a bit today from 3:00 am levels and are now in positive territory. As for fixed-income, bonds have been challenged as interest rates have moved up, and prices have declined, although year-to-date returns are still quite positive.

In general, the markets are reacting to and adjusting for:

  • Possibility of greater infrastructure spending and tax reform
  • Much less commitment to global trade and a potential pivot away from Asia
  • Orientation to less restrictive financial and climate regulation
  • Less tolerance for low interest rate policy and the possibility of an increase in inflation

What are we doing now and what do we anticipate in the weeks ahead?

  • We have not changed our equity positioning; we believe returns will be positive going forward. We are on the watch for higher volatility and may add to positions if we have a larger selloff. Our managers are charged with positioning portfolios with a look towards the next few years and assessing the impact of sectors and regions.
  • In the fixed-income arena, we, along with our managers, remain nimble. We remain vigilant for the possibility of higher interest rates – which we warned investors about in previous monthly updates – and added Treasury Inflation Protected Securities (TIPS) to portfolios in recent months. We still believe the Federal Reserve will raise interest rates in December. However, at some point bond markets will become attractive again in the face of slow global growth and limits on inflation. We could increase our exposure to fixed-income should bonds overreact with a greater sell-off.
  • We remain focused and committed to socially responsible and sustainable investing; corporate engagement, advocacy, leadership and scrutiny on governance and environmental impact of our investments. We know it is not only about numbers.
  • We reinforce our commitment to you regarding our diligence, oversight and stewardship of your assets, with careful adherence to our mission to work on your behalf, despite potential financial challenges.

Please let us know if we can be of further assistance. You can contact us at (877) 806-4989 (Toll-Free) or info@ucfunds.org.

 
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