1. Look to Large-Caps

Regardless of who wins the election, the trend to bring manufacturing back to the U.S. and to shorten supply chains will benefit larger companies, Mortimer says. He notes, however, that large-caps may fare better than small-caps under a Biden administration, given that they’re tied more to the global economy, may benefit from a weakening dollar and may be better positioned to profit in a higher corporate tax environment.

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2. Buy American — Stocks, That Is

BNY Mellon currently favors U.S. equities, given the Federal Reserve’s accommodative policies and signs of a strong consumer and the economic rebound underway. Mortimer cites expectations for more multilateral trade policies under Biden that could weaken the U.S. dollar and the potential de-risking of U.S.-China trade tensions.

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3. Consider Emerging Markets With Few U.S. Exports

A less protectionist trade policy may stimulate growth for many export-driven emerging market economies. Emerging market countries most dependent on exports may be hurt, while others with fewer exports to the U.S. might do quite well in comparison — e.g. Mexico and Canada, each with 70–80% of exports to the U.S., vs. Russia (<5%) and China (20%).

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4. Recognize the Value of Tax-Exempt Bonds

In the lower-for-longer yield environment, BNY Mellon continues to emphasize the value of tax-exempt bonds. Mortimer notes that Biden has advocated increasing the marginal tax brackets for the highest income earners, which would make municipal bonds more attractive in that this would increase the tax-equivalent yield.

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5. Diversify Your Assets

BNY Mellon currently has a small overweight to diversifiers, which help buffer market swings. The September equity market volatility, with a rotation from technology names that have led the rally to more cyclical names, underscores how quickly market trends can shift, Mortimer says, making it important to have asset classes that are less correlated to stocks and bonds.

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In the runup to the Nov. 3 presidential election, Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management, has issued five recommendations for investors to consider for their portfolios in the event former Vice President Joe Biden wins.

Mortimer looks at how client portfolios are currently positioned and offers some perspective on the types of changes his firm may consider making in the event of a Biden victory.

“We have not yet made any asset allocation changes solely in anticipation of the election outcome, but continue to base our decisions on fundamentals — not who wins the election,” he says.

See the gallery for Mortimer’s five recommendations.

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