The presidential election is imminent. So investors are increasingly speculating about which candidate will be more positive for stocks and other assets. History has shown that effects of a presidential election on equities wane after the winner’s first year in office. In other words, remaining invested and not buying and selling because of electoral results has been a sound strategy. Alone, that could bolster the case for the ALPS O’Shares U.S. Quality Dividend ETF (OUSA ) as a fund to consider over the near term.
OUSA is higher by 3% over the past month and up an admirable 18.77% year to date. But as its name implies, it’s a dividend ETF, so investors should take the long view. In fact, more than 30 Senate and all the House of Representatives seats are being contested this year. So OUSA could be an interesting post-election idea for patient investors.
Gird for Gridlock With OUSA
In the months leading up to presidential elections, there’s always significant chatter about how the two candidates could potentially affect markets and various sectors. In reality, it’s the policies set forth by Congress that have the most tangible impacts.
That underscores the potential allure of OUSA. That’s because political pundits increasingly expect that the two chambers of Congress will be divided: Democrats taking control of the House with the Republicans winning a narrow Senate majority. On a historical basis, markets often hold steady or even thrive during periods of gridlock. That’s because it limits the chance for controversial legislation.
A divided Congress could limit the scope of potentially investor-rattling bills aimed at sectors such as technology and healthcare. That’s pertinent to investors considering OUSA because those groups account for 38.57% of the ETF’s roster.
'Positive Environment for Equities'
Additionally, OUSA’s emphasis on high-quality stocks with favorable volatility traits and compelling dividend dynamics could be attractive to investors as interest rates decline amid the specter of a divided Congress that doesn’t accomplish much. On the macroeconomic front, the ALPS ETF could be supported by increasing expectations of a soft landing coming to fruition.
“The thing I want people to keep in mind is that, broadly, we anticipate a soft landing in the [US. That means] US growth is going to continue to be positive this year and next year, even if it is at a slightly slower rate,” noted BNP Paribas Chief Market Strategist Daniel Morris. “[That] should still be a positive environment for equities, even if inevitably there’s going to be some differences at a sector level depending on who wins.”
VettaFi LLC (“VettaFi”) is the index provider for OUSA, for which it receives an index licensing fee. However, OUSA is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OUSA.
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