Bolster your portfolio for any Election Day outcome

With Election Day underway, income investors should soon find out how their portfolio may — or may not — be affected by the outcome.

Volatility may spike throughout the day and possibly in the weeks ahead.

What investors need to avoid is reacting to the market rumblings, said Colleen Cunniffe, head of global taxable credit research at Vanguard.

“Tune out the noise and keep in mind what you can control,” she said. “Stay focused on your long-term investment strategy.”

In fact, the race between former President Donald Trump and Vice President Kamala Harris is expected to be tight and there is even a possibility the victor may not be immediately clear.

“If results remain opaque days after the election, we expect increased market volatility that could provide investors an opportunity to rebalance their portfolios,” Wells Fargo Institute said in an Oct. 29 note.

For instance, the recent rise in Treasury yields after they fell sharply at the end of the summer has presented a window for investors to lock in high yields, said Collin Martin, fixed income strategist at the Schwab Center for Financial Research.

“With yields back near the high-end of their 3-year range, it makes sense to extend duration in moderation,” he said. That said, Martin expects a lot of volatility going forward and yields may modestly rise or fall depending on the data.

“We prefer investors focus on a ‘benchmark’ duration that is in-line with the 6.2 average duration of the US Aggregate Index rather than having an average duration that’s either too long or too short,” he said. “Focus on the income earned, especially with Treasury yields back above 4% all across the curve.”

Here is what various experts have said to possibly expect, depending on the ultimate outcome.

One big issue on the agenda is tax policy. Trump has called for reducing corporate tax rates as low as 15% from 21% and for a universal baseline tariff as high as 20% on imports — and up to 60% on imports from China.

Harris has said she wants to boost the corporate tax rate to 28% and increase the top rate for long-term capital gains to 28% for those making more than $1 million.

However, to make those proposals a reality would likely require a sweep of either party.

Also at stake are the provisions in the Tax Cuts and Jobs Act that sunset at the end of 2025, unless Congress intervenes. Among the provisions set to expire are the…