Where should investors position themselves following Trump’s re-election? To discuss this, our expert Cédric Le Berre had a chat with our partner Bell Asset Management’s Chief Senior Strategist, Andrew Sleeman.
Where should investors position themselves following Trump’s re-election? To discuss this, our expert Cédric Le Berre had a chat with our partner Bell Asset Management’s Chief Senior Strategist, Andrew Sleeman.
The differences with Trump’s first term in office, says Andrew, are that this time his election was not a surprise, he is prepared with the right people around him, and he has both houses on his side. So markets are optimistic – the ‘Trump Trade’ has already started in the bond market, for instance. But remember that with Donald Trump, nothing is certain and things can change very quickly.
If the President-Elect’s stated priorities – tax cuts, tariffs and immigration – are duly implemented, inflation is set to rise. What happens on tariffs will depend on the position of the Senate and on how foreign policy shapes up. In any case, Andrew expects to see more reshoring of companies’ operations, prompted not only by tariffs but also by geopolitical pressure, and a trend towards a rerating of small and medium-sized capitalisations (so-called ‘Smids’) in view of the looming deregulation favouring small businesses.
For a long time, Smids have traded at a 25% discount to the market, and 40% compared to large caps. According to Bell, this change of US government could be the catalyst for Smids to come back to par with, if not to a premium over large caps, which, Andrew says, would be their rightful place given the growth they create, making them an attractive diversifier.
The views and opinions expressed by partner managers may differ from the house view. They are shared for informational purposes and do not constitute investment advice or a recommendation.
