AOM Political Gridlock 1

Political Gridlock As the 2024 U.S. presidential election approaches, investors are increasingly focused on potential policy shifts and their implications for equity markets. What does history tell us about market performance when one party controls both the White House and Congress versus when power is divided?

Median S&P 500 1-Year Returns After Election by Degree of Party Control Since 1980 12.0% Global Military Spendin

Source: FactSet, Standard & Poor’s and Alger. S&P 500 median price performance from November through October 1980-2023. A “Sweep” is when the House, Senate and Presidency are all controlled by the same party, and a “Split” is any other time. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

• As shown in the chart above, a sweep election—where one party controls both the White House and Congress—has historically resulted in a 7.6% median return over the following year since 1980. However, a split election—where control of the White House and Congress is split between Republicans and Democrats—has produced stronger market performance, with a 12.0% median return over the same timeframe. • In our view, stronger market performance after a split election is largely due to reduced policy risks, as political gridlock limits the likelihood of radical legislative changes, such as increased corporate taxes or significant industry regulation. Compromise often results in moderate policies reducing uncertainty for investors and thereby supporting equity valuations. • We remind investors that investing based on political outcomes has historically led to undesirable results as we have written in the past, see Economic Policies and Market Realities and Beyond the Ballot. Instead, we believe a more prudent approach is to focus on long-term secular growth companies, highlighting the importance of innovation and fundamentals over politics.

The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of October 2024. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. Risk Disclosures: Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Local, regional or global events such as environmental or natural disasters, war, terrorism, pandemics, outbreaks of infectious diseases and similar public health threats, recessions, or other events could have a significant impact on investments. Past performance is not indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments. Important Information for US Investors: This material must be accompanied by the most recent fund fact sheet(s) if used in connection with the sale of mutual fund and ETF shares. Fred Alger & Company, LLC serves as distributor of the Alger mutual funds. Important Information for UK and EU Investors: This material is directed at investment professionals and qualified investors (as defined by MiFID/FCA regulations). It is for information purposes only and has been prepared and is made available for the benefit investors. This material does not constitute an offer or solicitation to any person in any jurisdiction in which it is not authorized or permitted, or to anyone who would be an unlawful recipient, and is only intended for use by original recipients and addressees. The original recipient is solely responsible for any actions in further distributing this material and should be satisfied in doing so that there is no breach of local legislation or…