US stocks do better under Democrats, says Fidelity

Analysis of the past 12 US presidential elections, spanning 48 years, suggests that US equity investors do better under Democrats than Republicans.

Fidelity Worldwide Investment, which published the research, based its finding on data from Datastream. And the gap is not small: average annual rate of return was 12% under Democrats versus 4% under Republicans.

Meanwhile, looking ahead to this year’s election in November, Fidelity said that spread betting data suggested the performance of the S&P 500 between now and then could impact the chances of Barack Obama (pictured) gaining re-election.

However, investors would have cause to cheer such an outcome, as stock market data also suggests that it performs better if the incumbent wins.

Tom Stevenson, investment director at Fidelity Worldwide Investment, said: “Looking at stock market performance following the last 12 elections suggests that investors should, in the short term at least, be rooting for an Obama victory. History shows that markets tend to rally after a win for the incumbent party by more than 10% on average, but fall modestly if the challenger is successful.”

“With America teetering on the brink of the so-called ‘fiscal cliff’ the outcome of the US election is likely to be significant for markets and investors.”

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