Electing the right perspective on elections
Election years always seem to raise the question, “Will my investments be affected?” And the answer may not be what you expect.
Despite the emotional uproar, campaign promises, and uncertainty that elections bring, investments historically have performed about the same in both election and nonelection years.
According to financial advisor Aviva Miller, “Vanguard research dating to 1860 finds no evidence of higher equity volatility in election years and no relationship between asset returns in election and nonelection years.”
Data show that the compounded annual return for a 60/40 portfolio (60% equities and 40% fixed income) during midterm election years was 8.1% compared with 8.2% in years with no midterm or presidential elections.*
But what about volatility? Our calculations have shown that the 100 days before and after a presidential election have presented low volatility data compared with the rest of the period and in nonelection years.