This quarter's report highlights the impacts of the Federal Reserve’s rate cutting cycle and market expectations surrounding presidential elections

Lincoln Financial (NYSE: LNC) released its latest edition of Market Intel Exchange, curated from the firm’s in-house investment expertise and in partnership with industry-leading asset managers, known as Lincoln’s Multimanager Platform. In conjunction with this data, Jayson Bronchetti, Chief Investment Officer, shares a high-level overview of the takeaways, using visuals from the report in the company’s CIO Perspectives video.

Key insights from the latest edition include:

What the start of the Fed rate cutting cycle may mean for investors: The Federal Reserve recently began its highly anticipated easing of monetary policy with a 50-basis point reduction as their attention turns from inflation to the labor market. With additional easing expected, investors are assessing the potential implications for their portfolios. This may be a catalyst for cash to begin moving off the sidelines as yields on cash equivalents have historically declined 2% on average within twelve months of the first cut. U.S. equities generally see positive returns after the start of cuts, but results are highly dependent on the state of the U.S. economy. Regardless of where this cycle lands, investors should stay focused on their long-term financial goals, as stock performance in the five years later has historically generated positive returns, even when coinciding with a recession.

How have markets performed in the months surrounding presidential elections: With the presidential election quickly approaching, investors may begin to see volatility work its way into equity markets if history is an indicator. However, research shows that this choppiness tends to dissipate quickly once the results are in. Markets have also historically experienced a strong rally following election day, gaining roughly 16% on average over the subsequent eight months, and 11.6% annually over the next decade. Regardless of which party prevails, investors are likely to be rewarded by exercising patience and maintaining a balanced portfolio.

Market volatility should be seen as an opportunity for investors: Market volatility is a feature, not defect, of investing, and the numbers show that investors can consider times of unease as opportunities, rather than setbacks. Using the daily closing prices of the CBOE Volatility Index (VIX), a real-time measure of expected near-term volatility of the S&P 500, an investment made on any day had a solid average return just shy of 10% over the following year. However, an investment made on days where VIX closed at elevated levels typically associated with periods of stress performed significantly better, rising upwards of 25% or more on average over the subsequent 12 months. By viewing volatility through an opportunistic lens, investors may feel empowered to not only stay the course through periods of turbulence, but perhaps even capitalize on the opportunity to put additional capital to work for the long-term.

“Lincoln Financial is proud to bring timely market insights and data to financial professionals and their clients every quarter. In partnership with our dedicated team of investment professionals, and our robust multimanager platform, we continue to help our customers achieve their long-term investment goals,” said Bronchetti.

More insights from Lincoln Financial and its network of asset management partners can be found on the Market Insights page on LincolnFinancial.com.

About Lincoln Financial

Lincoln Financial helps people to plan, protect and retire with confidence. As of December 31, 2023, approximately 17 million customers trust our guidance and solutions across four core businesses — annuities, life insurance, group protection, and retirement plan services. As of June 30, 2024, the company had $311 billion in end-of-period account balances, net of reinsurance. Headquartered in Radnor, Pa., Lincoln Financial is the marketing name for Lincoln National Corporation (NYSE: LNC) and its affiliates.

© 2024 Lincoln National Corporation. All rights reserved.

Lincoln Financial is the marketing name for Lincoln National Corporation and insurance company affiliates, including The Lincoln National Life Insurance Company, Fort Wayne, IN, and in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY. Variable products distributed by broker-dealer/affiliate Lincoln Financial Distributors, Inc., Radnor, PA. Securities and investment advisor services may be offered through non-affiliated broker dealers.

This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY, and their applicable affiliates (collectively referred to as “Lincoln”). This material is intended for general use with the public. Lincoln does not provide investment advice, and this material is not intended to provide investment advice. Lincoln has financial interests that are served by the sale of Lincoln programs, products and services.

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