Thesis Asset Management says it will look for buying opportunities if an unexpected result in the US election prompts substantial stock price falls.
Heightened volatility surrounding the presidential election and a potential interest rate rise from the US Federal Reserve means Thesis is underweight in US equities.
With Donald Trump currently trailing in the polls, research analyst Ryan Paterson says a victory by the Republican nominee could undermine the dollar and US debt securities.
“Should we see substantial falls, on the back of an unexpected result, we are likely to view this as a buying opportunity,” Paterson says.
The asset manager’s core US holding is S&P 500 tracker fund Fidelity Index US.
It moderately trimmed the holding in February due to the S&P trading in the upper region of its historical valuation range. It also foresaw a reduction in the growth of corporate earnings.
Trump’s protectionist rhetoric and foreign policy were causes for concern.
However, Paterson says Trump offers some pro-business policies, such as reducing corporation tax rates to 15 per cent and unleashing a massive infrastructure spend.
While Clinton would be favourable for risk assets as investors “breathe a collective sigh of relief”, her win would more likely to be followed by a rate rise in December, which would bring equities and Treasuries under pressure.
“Furthermore, Clinton has been very vocal on healthcare, expressing her dislike of certain pricing practices,” Paterson says.
“We have already seen this weigh on the pharmaceutical sector and if the Democrats end up taking control of the White House, Senate and the House of Representatives, there may be pressure on Clinton to push forward further reform and restrictions on the private sector.”