City Index has launched two indices that track 200 stocks that will be affected if either the Republicans or Democrats win the election. To find out more about them, I spoke with Alexander Ridgers, the Global Head of Dealing at City Index, about the new election indices introduced by City Index in light of the upcoming US elections.
We discuss the unique features of these indices, how they differ from other offerings, and the potential trading strategies that clients can employ. The conversation also covers the expected market behaviour around the elections, including volatility and client trading patterns, as well as hedging strategies to manage risk during this period.
You can also listen to this interview on Spotify here.
Alex provides insights into the sectors and stocks that may be impacted by the election outcomes, emphasizing the importance of understanding market dynamics in trading decisions.
The two BITA US Republicans in Power Index (BURIPI) and the BITA US Democrats in Power Index (BUDIPI) were both released in August 2024 to track the performance of large U.S. companies expected to benefit under the influence of the respective political parties. The indices weigh constituents based on their free float market capitalization. These indices aim to capture the impact of political power on market sectors, offering investors a way to trade on political trends.
Here is a summary of what the two indices do:
BITA US Republicans in Power Index (BURIPI):
This index tracks the performance of large U.S. companies that are expected to benefit from Republican Party influence in government. It takes into account various aspects of governmental power, such as the presidency and Congress, and weighs the companies based on their free float market capitalization. The index aims to represent sectors and companies that tend to thrive under Republican policies.
BITA US Democrats in Power Index (BUDIPI):
This index tracks the performance of large U.S. companies that are expected to benefit from Democratic Party influence in government. Similar to the Republicans’ index, it considers different forms of power within the government and is designed to capture companies that may perform well under Democratic policies. The companies are weighted based on their free float market capitalization.
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