Predicting Policy:
Private Equity’s insights on the impact of the US election

by Andrés Ramos, Content Marketing Specialist – eVestment Private Markets

A change of government leadership in the United States almost always means an accompanying change in economic policy and initiatives. At the portfolio company-level, private markets fund managers are deeply entrenched in virtually all sectors of the economy, so one way or another, new administrations mean an impact on investor portfolios.

How the new Democratic leadership in both the executive branch and the legislature will implement change is yet to be seen, but many in the private markets are already postulating and planning for what is to come.

We decided to take a look at Market Lens to see what some investors on both the LP and GP sides are saying about the shift, here are some of the highlights.

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Increased government regulation, yet a net positive for technology

San Francisco ERS – CIO Report

At this writing the result of the January 5, 2021 election for one seat in the U.S. Senate was unknown. If the Democratic candidate wins, there may be some initial impact on investing while the long-term impact will depend on actual lawmaking.

A Democratic victory would probably result in increased spending, which would be a positive for infrastructure and consumer spending, renewable energy and industrial companies. It may also result in higher taxes on businesses and high income individuals and greater regulation of business, particularly toward big-tech. Increased regulation of big-tech, however, could also be a positive for innovation, competition, and enable smaller and midsized tech companies to thrive without being squashed by one of the giants. Hence, Democratic control may be a negative for very large tech companies, but it’s not necessarily bad for tech overall.

Planned stimulus will eclipse previous packages

Alabama Retirement Systems – Quarterly Economic Update

If the Democrats win both Georgia Senate seats, we expect a fiscal stimulus package of at least $3 trillion to be passed in early 2021. To put $3 trillion into context, the combined size of the previous four relief packages is $2.4 trillion.

Even under a split government scenario, we expect fiscal policy to be highly stimulative in 2021.  We believe the odds are over 50% for a stage 4 relief package in the $900 billion range passing before year-end. We also believe that once the new administration gets into office, they will be quick to pass another relief package in early 2021. Further adding to the stimulus, the Treasury has committed to drawing down the Treasury General Account (TGA) to $800 billion to fund the stimulus.

Continued economic recovery will vary by industry

AEW Capital Management – Presentation for Marin County ERA


  • Despite taking back the White House, Democrats largely under performed in House and Senate races curtailing any type of Blue Wave mandate.
  • Significant policy changes seem likely unachievable if Republican control of the Senate remains intact following early January run-off elections in Georgia.
  • To the extent that Trump administration policies were enacted through executive order only, most or all likely to be reversed.
  • Economic recovery from Q2 contraction well underway, but easiest gains have already occurred.
  • Continued progress through 2021 and beyond will vary considerably by industry and location (K-shaped recovery).

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