Matt Powers, Powers Advisory Group managing partner, joins Alexandra Canal on Wealth! to discuss how to best position your portfolio in a rate easing cycle, considering it's an election year.

In the lower interest rate environment, Powers focuses on traditional defensive sectors like utilities, consumer staples, and financials, noting that “we still expect some short-term volatility as we enter October, which is historically the most volatile month of the year in election years.”

He names Target as a good option to weather the expected volatility. "We're a dividend growth firm that's kind of our core focus, but they've got a great history of growing their dividend. But beyond that their recent earnings report, they beat on both earnings per share and revenue. And they've returned to a growth mode after a long stretch of underperformance, improved digital sales last quarter, 8%, was up in in-store sales as well. So we just think they're positioned nicely moving forward.”

On the fixed-income side, Powers says, “We really say target the intermediate, the middle. And keep some short-term liquidity available… The theme really is to move away from the short term, extend your duration slightly before more rate cuts.”

For investors considering adjusting their portfolio ahead of possible October volatility and the election, Powers says, “I don't think that any big knee-jerk changes before an election are a good idea because we don't know, obviously, who's going to win the election.” He adds, “We're looking at a reallocation really towards dividend-based side and dividend-based ETFs. So some broad-based exposure and capturing higher yields and likely some appreciation as funds flow into this area.”

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This post was written by Naomi Buchanan.