October is here, and with it, election coverage and discourse is peaking. Global audiences will be clued in to the outcome of U.S. elections, and investors are no exception.
While the news media has largely focused on the headline-grabbing gaffes and attacks, one key policy debate has gone missing. Both candidates will face a rising tide of deglobalization that threatens increased volatility for U.S. investors. That volatility could see active investing emerge the true winner of the 2024 election.
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Both major U.S. candidates for president would face a global market defined by trends like reshoring and competition with China. Of course, how they would deal with those challenges differs. Per analysis by T. Rowe Price associate analyst Gilad Fortgang, former President Donald Trump “would likely focus” on trade deficits. Meanwhile, Vice President Kamala Harris would “likely favor” building on existing ties with other nations to compete with China.
Focusing on deficits may see Trump lean on the tariff plans he has emphasized while campaigning. Harris’ administration could see further focus on limiting China’s access to advanced technology. Both cases could create dislocations for U.S. firms, whether via higher costs or a changing tech landscape. Investors, then, may want to lean into active investing to adjust.
Active investing, especially via ETFs, offers some real advantages to benefit investors and advisor clients. Active managers can often leverage firm-specific fundamental research to identify standout opportunities. At the same time, absent the requirements for investment committees to meet to decide on moves, active managers can adapt quickly to macro trends in trade or to policy moves and election outcomes.
With strikes currently impacting U.S. ports, trade policy may loom over markets more than it has so far this year. Whichever way the election goes, active investing can identify and adapt to dislocations in U.S. equities. The T. Rowe Price Capital Appreciation Equity ETF (TCAF ), for example, offers one option therein. Charging only 31 basis points and managed by David Giroux, its active approach and long-term capital appreciation approach could appeal.
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