The recent US election results have sent significant ripples across the investment landscape, with fund managers expressing differing views on the potential impact.

While some believe there may be opportunities for growth, others note increased uncertainty.

Sustainability

According to Nazmeera Moola, chief sustainability officer at Ninety One, a Republican victory could signal a US withdrawal from all global climate initiatives, as seen during Trump's first presidency.

"This is likely to slow down the momentum to combat climate change unless other parts of the world step up and fill the gap," she said, pointing out that China and India will continue to focus on energy transition investments .

Still, Mulla opined that while a red sweep is "purely negative for climate considerations," the complete cancellation of all elements of the U.S. Inflation Reduction Act, adopted in 2022 to promote clean energy initiatives, remains questionable.

"Other considerations include the impact of future rate increases on the costs of new US renewable energy projects and the likely expansion of oil and gas exploration on federal lands as environmental legislation is repealed," she said.

Australian shares

Australian companies are also likely to be hit by Donald Trump's pro-US growth and inflation policies, noted Chris Haynes, head of equities at Equity Trustees Asset Management.

"The combination of larger tax cuts, higher government spending and the prospect of significant tariffs are likely to keep inflation higher and reduce the pace of interest rate cuts," he said.

In particular, companies with US dollar exposure should benefit from a pro-business administration and a stronger US dollar, such as Macquarie, Computershare and CSL.

However, other areas of the market, such as Australian commodities, could bear the brunt of a "US-first/aggressive China push", affecting companies such as BHP, Rio Tinto and Fortescue, Haynes said.

US stocks

Schroders' head of global equities, Simon Webber, said the fund manager remained bullish on US equities in the 12-month outlook, given that corporate tax cuts and deregulation could prove favourable.

"There are some risks to corporate profitability from a Trump victory, as tariffs could put a damper on profit margins in some sectors that still rely on Chinese imports." Meanwhile, an expected curb on immigration could boost wage growth, particularly in the consumer and construction sectors," he said.

"These are inflationary dynamics. Companies with pricing power [the ability to raise prices without denting demand] should do better in this environment, although demand destruction could be a possible scenario.

Trump's proposed corporate tax cuts and deregulation would also serve as a headwind, supporting areas such as bigger banks and artificial intelligence, Weber added.

Meanwhile, Tim Murray, capital markets strategist at T. Rowe Price, agreed that small U.S. companies could benefit from Trump's victory, especially if the administration rolls back regulations and takes a softer stance on mergers and acquisitions.

“Small businesses were cautious before the election, so more policy clarity could prompt them to restock and increase business spending. The potential for further corporate tax cuts and for the Fed to ease monetary policy will also be a tailwind,” he said.

Mining

While the resolution of uncertainty and positive growth implications from the election results led to significant gains in US equity markets, the US dollar and government bond yields, Stephen Dover, head of the Franklin Templeton Institute, warned of potential risk from higher bonds yields.

“The main risk to US and global equity markets is rising bond yields. To the extent that higher yields represent stronger growth expectations, the outcome is less problematic,” he said.

However, to the extent they reflect a rise in inflationary expectations or a squeeze on investment due to projected large fiscal deficits, higher yields "could limit overall capital returns."

"The associated risk is that the Fed could stop easing US monetary policy and even reverse course by raising interest rates." A rate hike could happen if the acceleration in growth leads to higher inflation. In that scenario, bond markets will be watching closely for signs that the Trump administration may try to limit the Fed's decision-making independence,” he said.

Chris Igoe, chief investment officer, core investments at AXA Investment Managers, highlighted how the market response to Trump's victory was "a repeat of 2016", with higher yields bottoming out in September only to rise 62bp. p. until election day.

"If the 2016 model should it happen again, then we could expect yields to continue to rise by another 100 basis points or so over the next year or two, giving a nominal yield of about 5.5 percent,” Igo said.

However, he also noted that the 2016 model. shows that yields "haven't really gone up that much" since the initial spike after the election.

"Between the end of November 2016 and November 2017 the total return of the ICE BofA US Treasury Index was 2.0 percent. Yields actually fell for part of that period,” he said.

Currencies and commodities

Also reflecting on Trump's 2016 victory, Global X pointed out that the US dollar had appreciated sharply against major currencies at the time, driven by expectations of fiscal stimulus, tax cuts and infrastructure spending.

"This could happen again with a Republican-led administration supporting the U.S. dollar, especially in trade-exposed regions," it said.

Oil also rallied after the 2016 results, benefiting from Trump's pro-energy stance that favored traditional energy sectors.

For Global X, such an approach could support fossil fuels and infrastructure today, potentially easing regulatory barriers to allow production to expand.

However, he warned that external risks, such as OPEC decisions and China's slower economic recovery, could "limit oil's upside potential", even with US policy support.

The fund manager also noted potential price moves from gold amid Trump's pro-growth policies and renewed fiscal stimulus.

"However, tariff and geopolitical uncertainty could occasionally support demand for gold as a hedge," Global X said.

Viewing a macro as a "tool"

Meanwhile, fund managers such as GQG noted that macro events such as the election could instead offer "a better understanding of the rules of the game", noting that as for the US, given that it is quite stable, " whoever is in the White House generally doesn't matter”.

"If we look at over 50 years of data, going all the way back to 1969, in the absence of a major economic downturn [and generally multiple declines]U.S. stocks, as measured by the S&P 500 or MSCI USA Index, have generally risen. We now know that past performance is not indicative of future success, so obviously things can change,” said Josh Snyder, GQG Global Investment Strategist.

Ultimately, the fund remains more focused on "preparation rather than forecasting," he explained.

“Our view is that revenue is like gravity. Show us where the profits are going and eventually we believe the price will match that. To the extent that possible policy changes, from tax cuts to regulatory changes or tariff enforcement actually affect revenue growth, we will react to the data.

"At the same time, if short-term headlines increase volatility for names where we believe the fundamentals are unchanged, we'll be happy to pick up that volatility as well."

He went on to say that investing "is about setting the sails" rather than predicting the wind.

"For us, the biggest business risk is often the execution, not the election," Snyder said.