Long-term investors entered November with the largest allocations to equities seen in two decades. 

Hindsight can be a great thing in retrospect but it has absolutely nothing over a good serving of accurate foresight.

Although the result of the US presidential election might look obvious with our 20/20 view of, like, the early part of this past week, the truth is there are not all many out there who were willing to stake their investments on what was expected to be a tightly contested outcome.

High Allocations

Except, of course, some of the more prescient institutional investors, as revealed by the latest State Street Institutional Investor Indicators report released on Friday.

According to Michael Metcalfe, head of macro strategy at State Street Global Markets, long-term investors entered November with the highest allocation to equities ahead of an election in two decades, and they were «well-positioned for the initially positive market reaction to the election result».

Risk On

He indicated that those investors overweighted US equities relative to European and emerging market issues, something that should also prepare them for any potentially negative implications from US tariffs.

Overall, risk appetite among institutional investors remained strong at a positive 0.18 in October, a level that had only fallen modestly from levels seen in September and that long-term investor allocations to equities fell 39 basis points to 52.7 percent, with cash up 42 basis points at 19.2 percent and fixed income largely unchanged.

No Bonds

That is because bonds didn't fare well, with demand for long-dated US treasuries suffering a «serious wobble» in October, falling to a four-year low - even though they were already at historically depressed levels.

State Street said this will be an important factor to watch in 2025 given the expected increased prominence of fiscal sustainability in the US and elsewhere in the media and the markets.

China Fades

In developments closer to home, demand by institutionals for Chinese equities rose to a three-year high by the middle of October following various stimulus measures introduced by the mainland government, although that impact is «beginning to fade gradually» as investors weigh the threat of potential further stimulus against possible US tariffs.

If nothing else, it looks like many institutional investors are well prepared for a second round of geopolitical confrontation between the US and China and a new, updated version of the Trump economy.