The portfolio fell 6% in October, a result roughly in line with the European market index ($VGK). European stocks were under pressure due to the increasing probability of Donald Trump winning the US presidency. Trump’s tariffs could reduce European GDP by 0.5%-1%.
www.euronews.com/business/2024/11/04/how-much-could-trumps-tariffs-damage-europes-economy

For the year-to-date, US stocks have returned +21%. European stocks, in which the portfolio is concentrated, are up 7%. Asian stocks are up 4%.

The US outperformance this year extends a trend that has been in place since 2009. Because the US has consistently been the strongest stock market for the past 15 years, some have concluded the US is the only country worth owning.
caia.org/blog/2024/10/11/what-does-once-generation-investment-opportunity-look-llke

There are reasons to doubt, however, if the trend of US outperformance will continue. US companies are on average better-run than non-US companies. But the US market has benefited from a large fiscal deficit and tax cuts, which will hardly repeat.
www.bridgewater.com/research-and-insights/us-exceptionalism-drivers-of-equity-outperformance-and-whats-needed-for-a-repeat

So what will happen after the election?

The conventional wisdom, Bank of America market strategist Michael Hartnett explains, is that a Harris win would mean lower US stocks. A Trump win, by contrast, would boost US stocks, but pressure those in the rest of the world.

Hartnett contends, however, that things are not that simple. A Trump win might lead to lower stocks everywhere, if markets become worried about fiscal deficits. The nightmare scenario would see the US 10-year interest rate at 5.5%.
dampedspring.com/wp-content/uploads/2024/11/Warning.pdf

A Harris win, on the other hand, might lead to higher stock markets, if investors get comfort from the status quo remaining.

Hartnett also believes a Trump win might counterintuitively lead to non-US stocks outperforming US stocks over time, as European and Asian central banks stimulate their economies to counteract Trump’s tariffs.

I do not know who will win the election. And whoever wins, there may be short-term turbulence in the market. I would generally see such turbulence as an opportunity, particularly if Trump wins and European stocks drop sharply as a result.

The real risk scenario every investor has to worry about is if the market turns its focus to US deficits. The resulting sell-off would be global, with few places to hide. But it is difficult to tell if or when this might happen.

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SWDA.L +17.0%

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Santander was sold, Vinci bought.