Does It Matter Who’s in Office?

Chart of the Week for November 10-16, 2000

As America ponders the political fallout of the 2000 presidential election’s non-result, let’s turn our attention to the historical performance of the stock market under Republican and Democrat administrations since 1929, using the S&P 500 Index’s performance.

Looking at the chart above, the S&P 500 Index tends to perform better in the first calendar year of a Democratic administration. The overall average return of the index is 13.8% with Democrats in office (during the first year) versus 1.9% with Republicans. However, the gap is considerably less when the full terms are taken into consideration.

Given that the two parties espouse different philosophies (and that these philosophies have strong implications for the economy and businesses), the policies and regulations they enact have a great impact on the performance of different sectors and industries. In the next four years, the impact may be felt most strongly in the energy, healthcare and pharmaceuticals, technology and communication sectors under either administration.

Regardless of who controls the White House and other branches of the government, there are no substitutes for sound investment strategies. Though certain sectors tend to perform better depending on which party is in charge, investors should maintain a long-term focus by diversifying their portfolios across different sectors and market capitalizations.

* This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 1-800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240, or by visiting www.icmarc.org. Please consult both the current Vantagepoint Funds prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights and investment objectives, risks and performance information prior to investing any money. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. For a current prospectus, contact ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400.