The effects of the pandemic on the markets may be more impactful than that of the upcoming Presidential election, even though the election contest has the potential to create volatility, according to two advisors.

Victoria Fernandez, Crossmark Global Investments' chief market strategist, said in a recent interview that balancing technology with large cap investments that have sound fundamentals is a good strategy. She advocated creating what she called a “barbell” portfolio with investments in both “high-flying tech names, but also building [in] more staple names.”

"Since so much of the U.S. economy is relying on the Covid recovery, I’m not sure we see a huge market move [from the election] regardless of which administration prevails in November. Priorities will focus on Covid and not the more partisan desires of the administration,” she said. On the other hand, “a failure of a vaccine would be extremely detrimental to markets, but we also must keep a watch on consumption.

“The U.S. economy is more than 70% services driven and obviously that has been shut down. Increased savings have helped sustain consumption over the past couple of months, but with the extra unemployment insurance having been gone for about six weeks and no new stimulus package looking imminent, we have concerns how long that will last," Fernandez said.

“The Democrats may plan on increased social spending and raising corporate taxes [if they win], but they will not be able to move while we are still in a pandemic,” she added. “Partisan agendas will have to be put on a back burner until things get back to a more traditional path. It is going to be nine to 12 months before anyone can move” on new policies.

Crossmark is keeping clients fully invested in companies with good fundaments, she added. Some of the companies the firm looks favorably on are Wal-Mart, Charter Communications, Service Now, JPMorgan, NextEra Energy, S&P Global and McCormick. For instance, the last, a spice company, is included because people are doing more cooking at home, she said. “We go to the balance sheet to see if the company can withstand some volatility,” she said.

How the tech side of the portfolio and the large-cap side should be balanced—the two ends of Fernandez’s barbell—depends on the individual investor, she said. “But we are not going to cash. We did not recommend that even in March. We are looking in areas where we see continued upside as we begin to come out of lockdown and start to open up our economy. We have never been part of the camp that chases the market and makes big bets on quick Covid-19 trades,” she said.

Stephen Dover, head of equities for Franklin Templeton, agreed with Fernandez’s assessment in a recent blog post.

“Both Democrats and Republicans agree on infrastructure spending, China trade, intellectual property issues, and bringing supply chains back for domestic production. However, we believe there are nuanced differences, including what [constitutes] infrastructure, and how technology and 5G may be part of voters’ and investors’ considerations,” Dover said.

Dover said market phases and elections are somewhat predictable cycles—headwinds, tailwinds, and uncertainty in the outcome are parts of both processes. The cycles can affect each other in unpredictable ways.

If the election results in a “split Democratic and Republican-led government, it will actually be quite good for markets,” Dover said. “The prospects of a ‘blue wave,’ we believe for investors, would be concerning as we could see a very dramatic shift in government posture and policies toward markets, businesses, as well as towards regulations.”

The United States is helped by the fact that it had a very strong economy until the pandemic began, but Covid-19’s effects and its rates of infection, disease and mortality have created uncertainty globally across markets, he said.