U.S. Election Stumbles, With Leading Experts Expressing Concerns
In the latest issue of €uro am Sonntag, leading German fund managers discuss their expectations and strategies for the upcoming 2024 U.S. presidential election. The election is seen as a significant factor influencing investment decisions, but most managers are preparing to maintain or even increase their risk appetite despite the geopolitical uncertainties.
Election Impact on Portfolios
Over half of top institutional investors, including Germans, consider the 2024 U.S. elections an important factor for portfolio decisions. However, about three-quarters of investors feel their portfolios are moderately or well-prepared for election-related repercussions.
Risk Appetite Remains Despite Uncertainty
Despite heightened geopolitical risks linked to the U.S. election and other global tensions, one-third of institutional investors intend to pursue more aggressive, higher-risk investment strategies in 2025. This suggests German fund managers may also adopt a long-term perspective and view volatility as an opportunity.
Portfolio Adjustments
Many investors plan to increase cash holdings to manage uncertainty ahead of the election—especially investors in the U.S., but this flight to safety is significant among European and German investors as well.
Geopolitical Risks and Trade Policy Concerns
German companies and managers remain cautious about geopolitical tensions (including U.S. trade policies) that impact supply chains and market stability. Their strategy includes increasing local production to reduce exposure to tariffs and policy shifts, showing a pragmatic approach to political risks.
Economic Outlook Context
German fund managers are currently navigating a subdued economic outlook domestically, with recent declines in economic sentiment and concerns about sectors like chemicals, pharmaceuticals, and automotive. These factors may influence investment strategies alongside U.S. election factors.
Focus on Fundamental Performance
Despite political uncertainty, some German fund managers emphasize focusing on earnings growth and sector fundamentals. They prefer equities with good prospective earnings over simply reacting to policy or market sentiment.
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The 2024 U.S. elections are seen as a crucial factor in shaping German fund managers' investment decisions, with over half of top institutional investors considering it an important factor for their portfolios (Election Impact on Portfolios). Heightened geopolitical risks associated with the election and other global tensions have not dampened the risk appetite of one-third of these investors, who plan to pursue more aggressive investment strategies in 2025 (Risk Appetite Remains Despite Uncertainty).
