$100 BILLION FUND: There’s more to investing in the US than betting on Trump

REUTERS/Carlos Barria

US stocks on the whole have been rallying since President Trump got elected.

Two weeks ago, the Dow hit the landmark number of 20,000 and last Friday financials rallied on the back of Trump’s executive order to review both the Dodd-Frank and the fidiciary rule.

Analysts on the whole expect Trump’s stimulative policies to be good for US equities, as deregulation, fiscal stimulus, corporate tax cuts, and a Republican, pro-business attitude are generally good for the markets.

But, it turns out, having a lot in the US isn’t just a huge bet on the new administration.

That’s according to Rebecca Patterson, the chief investment officer of multifamily office Bessemer Trust, which overseas more than $100 billion in assets. “It’s also defensive,” she said in an interview with Business Insider.

According to Patterson, if Trump delivers on the stimulative promises that he campaigned on and the US economy does improve and the Fed raises rates, “all else equal we think that probably benefits the dollar and benefits cyclically oriented US companies.” So that’s good news for the US stock market.

But if something risky happens, like a trade war with China or increased protectionist measures, Patterson believes that US equities would fall, but still fare better than foreign markets.

American’s home bias when it comes to investing and the likely capital flow into US money markets and cash for safety would all push up the dollar, which is still good for US equities.

“Usually in risky events, even if the risk event is US caused, like our debt downgrade in 2011, US markets tend to do better than overseas,” said Patterson. ” They’re more liquid and the dollar tends to benefit in risk-off environments. So it helps your total return in dollars versus in overseas currencies.”