Alongside election chatter, we also heard lingering concerns over mounting U.S. debt. While that might lead to some tough battles ahead over taxes and government spending, we don’t foresee a U.S. fiscal crisis.
For those looking to manage the risks, tax-efficient investing should be a priority. From there, currency markets have historically shouldered most of the burden of a sovereign fiscal crisis. We don’t think the dollar looks at a risk of losing its reserve status any time soon, especially given its dominant position within global trade and other transactions, but it might be prudent to diversify exposure across other global currencies. Furthermore, real assets can play an important role as a potential portfolio diversifier and income source to hedge against the long-term risk.
