On 27 June, Joe Biden and Donald Trump faced each other in their first long-awaited TV debate. A quick poll by US broadcaster CNN clearly saw Trump as the winner, with 67% of the vote. Only 33 % saw Biden as the winner. Some media called Biden’s performance disastrous in parts. For example, he had problems finishing sentences coherently and comprehensibly. Trump, on the other hand, found it easier to speak freely and was not sparing with personal attacks against the current president.

It seems clear, the US election campaign is heating up. What should investors keep in mind now?

“While investors may feel tempted to take positions based on their expectations for the outcome, we advise caution,” wrote UBS Wealth Management in an insight this week. “Given continued uncertainty so far ahead of the vote, we favour expressing views with only a portion of a portfolio. Meanwhile, hedges in both equities and currencies can help manage risks.”

“It is important to remember the principle that investors should vote at the ballot box, and not with their portfolio,” UBS added.

Regarding the stock market, financial stocks tend to outperform ahead of elections, J.P. Morgan Wealth Management found. This is because whoever becomes president is expected to try to bolster growth with new policy initiatives. “Health care tends to do better under Democrats, while energy may be boosted under Republican leadership,” the insight added.

Union Bancaire Privée observed: “Investment returns during US presidential election years have been favourable for equity and credit investors outside of recession years. This is consistent with our optimism on both asset classes amidst the current economic expansion.”

UBP advises investors to position themselves in such a way as to benefit from the expected high returns on equities and credit in the run-up to the elections. From autumn on, investors should focus on risk management and switch to active sector, equity, and currency selection from 2025, when the likely winner has been determined.