Private wealth firmErik Penser Bank AB is betting on stock markets continuing to rally whatever the outcome of next month’s election in the U.S.
The Swedish bank, which manages $4.5 billion of clients’ money, has already made returns of 17% from its equity portfolio this year having correctly called the bottom of the crash in late March.
“We allocated maximum overweight to equities on March 24,” said Jonas Thulin, head of asset management at Erik Penser.
Since then, global stock markets have staged a swift recovery amid unprecedented amounts of monetary and fiscal stimulus. The MSCI World Index has advanced more than 50% from a four-year low at the end of March.
“Those who believe that stock markets are out of touch with macro are wrong,” Thulin said, and cites an “astonishing rebound” in the global economy.
Nor does the asset manager expect the momentum behind this recovery to be derailed anytime soon, and even says the prospect of a contested outcome inthe U.S. presidential vote “won’t rock the boat.”
Still, the privately-owned bank has built a “Trump basket” and a “Biden basket” within its equity holdings to profit from the eventual winner.
Its pro-Republican basket consists of U.S. equities in industries that will be positively impacted by key policies, including infrastructure, defense, big banks and federal land exposed to the oil and gas industry. The Joe Biden basket meanwhile comprises equity investments with exposure to renewable energy and to China, for example.
“So far, it’s very even with a small lead for the Trump basket,” Thulin said.
More broadly, the manager says he’s positioned for a V-shaped rebound by sticking with a maximum allocation to shares. He says he expects stimulus measures to have “a longer lasting impact” on equity markets than any temporary volatility over the coming three months.
“After January we will have a new government in the U.S. no matter what,” Thulin said.
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