In a historic midterm election that saw the highest early voter turnout ever, the Democrats have won enough seats to be the majority party in the House of Representatives for the first time since 2010. This continues a trend we have witnessed many times, where the president’s party loses control of the House in a midterm election.

In the other chamber of Congress, Republicans retained control of the Senate by flipping a few states in their favor and fending off challengers in key states like Texas and Florida. The resulting split Congress, where differences will be exacerbated by today’s increasingly contentious political atmosphere, could lead to greater gridlock in Washington.

Investment ideas for gridlock

To counter the potential for more gridlock, consider positioning portfolios more defensively. Think about:

Defensive equities:

  • Multi-factor blends featuring a lower market beta include: SPDR® MSCI USA StrategicFactorsSM ETF (QUS), SPDR MSCI EAFE StrategicFactorsSM ETF (QEFA) and SPDR MSCI Emerging Markets StrategicFactorsSM ETF (QEMM)
  • Dividend growth stocks: SPDR S&P® Dividend ETF (SDY)

Tail risk mitigation:

  • SPDR Gold MiniSharesSM Trust (GLDM)
  • SPDR Portfolio Long Term Treasury ETF (SPTL)

Rare bipartisan issues, like defense:

In September, Congress approved a defense spending measure to direct more than $670 billion to the Defense Department.1 Defense spending is likely to increase even with a split Congress, but the parties have different priorities:

  • Democrats will likely work to modernize the military with a potential focus on cybersecurity and advanced weaponry: SPDR Kensho Future Security ETF (XKFS)
  • Republicans want to advance President Trump’s plans for a Space Force: SPDR Kensho Final Frontiers ETF (XKFF)

A look ahead

Gridlock from a politically divided Congress will make for sensational headlines and likely constrain market sentiment. However a party split between Congress and the executive branch does not always trouble the market. There have been 11 years, dating back to 1933, with a party divide between the legislative and executive branches—and returns were positive in both political scenarios, according to Strategas Research Partners.

For additional post-election market insight, stay tuned to SPDR blog.

1https://www.cbsnews.com/news/senate-passes-funding-bill-to-avert-upcoming-government-shutdown/

Important risk information

Investing involves risk, and you could lose money on an investment in SPDR® Gold MiniSharesSM Trust (“GLDMSM”), a series of the World Gold Trust.

ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs’ net asset value. Brokerage commissions and ETF expenses will reduce returns.

Commodities and commodity-index linked securities may be affected by changes in overall market movements, changes in interest rates, and other factors such as weather, disease, embargoes, or political and regulatory developments, as well as trading activity of speculators and arbitrageurs in the underlying commodities.

Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.

Diversification does not ensure a profit or guarantee against loss.

Investing in commodities entails significant risk and is not appropriate for all investors.

Important Information Relating to SPDR® Gold MiniSharesSM Trust (“GLDMSM”):

The World Gold Trust has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the World Gold Trust has filed with the SEC for more complete information about GLDM and this offering. Please see the GLDM prospectus for a detailed discussion of the risks of investing in GLDM shares. The GLDM prospectus is available by clicking here. You may get these documents for free by visiting EDGAR on the SEC website at sec.gov or by visiting spdrgoldshares.com. Alternatively, the Trust or any authorized participant will arrange to send you the prospectus if you request it by calling 866.320.4053.

GLDM is not an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and is not subject to regulation under the Commodity Exchange Act of 1936 (the “CEA”). As a result, shareholders of GLDM do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.

GLDM shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of GLDM shares relates directly to the value of the gold held by GLDM (less its expenses), and fluctuations in the price of gold could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the gold represented by them. GLDM does not generate any income, and as GLDM regularly sells gold to pay for its ongoing expenses, the amount of gold represented by each Share will decline over time to that extent.

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