In the wake of Donald Trump's recent election, high-net-worth (HNW) investors are evaluating the potential impacts on their portfolios and overall financial strategies. Moez Kassam, CIO and co-founder of Anson Funds, provides an insider’s insight into how Trump’s administration might shape economic policy, market dynamics, and asset allocation.

With the Republicans securing the House this week, they now control every level of American government with no meaningful limits on policy preferences. They will utilize these powers to enact the full scope of their tax, energy, trade and regulatory agendas, with checks and balances existing mainly at the Senate level. Previous periods of total Republican control saw stocks return 8.0% on average, compared to periods of Democrat total control of 6.7%. Interestingly, both of these figures are below the average return of 8.3% for the Dow over the past 75 years since World War II.

In response to these victories, the S&P is seeing record highs and the dollar has soared with investors reaping massive gains. Despite bonds initially selling off post Trump’s win, the US10year is lower now than it was on election day, meaning that even US bond investors are making money.

With the tax cuts enacted during Trump’s first term set to expire, the unexpected Republican majority now suggests a much higher chance they stick around. Trump’s aggressive campaign promises – no tax on overtime are tips – will likely have a tougher time passing through the house but still suggest the potential for a material consumer windfall..

Kassam advises caution in the technology and healthcare sectors, in particular, which he sees as “crowded”. President Trump’s stance on tech regulation and healthcare reform remain among the most uncertain of his policy plans with prescription drug prices and Medicare Advantage both in Trump’s crosshairs. Regulatory shake-ups can have a huge impact on investors and compress stock multiples over a prolonged period.

The U.S. dollar is rallying amid talk of tariffs, which will likely hurt global economies. However, Kassam notes that slower global growth and perennial budget deficits will have a mixed impact on bonds but could compress the S&P’s high multiple.

Trump’s re-election could also pave the way for changes in estate tax laws. For HNW investors focused on legacy planning, Kassam suggests re-evaluating strategies around trusts and asset transfers to adapt to possible favorable adjustments.

Trump’s leadership style and policy priorities should lead to market volatility, notes Kassam, which provides both a challenge and an opportunity. Investors with diversified portfolios, particularly those who can leverage volatility, may benefit from strategic rebalancing in specific sectors likely to gain under Trump’s policies. Kassam suggests having exposure to some low-beta asset classes in order to have a source of cash during volatile periods.

Trump has historically been a proponent of domestic energy production and deregulation, which could stimulate growth in the oil and gas sectors. Kassam sees potential for investment in energy infrastructure and services but warns of the long-term risks associated with volatile oil prices and shifting global demand toward sustainable energy.

Increased tariffs and trade barriers could impact companies with significant international exposure, exacerbated by the translation impact from a higher dollar. Kassam suggests considering a shift in emerging market investments toward regions less affected by potential U.S.-China trade tensions.

Trump's support for defense spending and infrastructure projects could benefit companies in these sectors. International defense companies are also poised to benefit from Trump’s isolationist posture and his pressure on NATO nations to increase defense spending.

For investors concerned about stock market volatility, Kassam recommends diversifying into alternative investments, including hedge funds, private equity, and real estate. These options can offer higher returns with less direct exposure to market fluctuations tied to Trump’s policies.

Moez Kassam reminds us that, while Trump’s election may present distinct opportunities, it’s essential for HNW investors to remain adaptive and well-informed. By understanding the implications of Trump’s economic, trade, and regulatory policies, investors can strategically adjust their portfolios to mitigate risks and capitalize on emerging trends in the market.