While this election removes a significant element of uncertainty, we encourage investors to avoid euphoric reactions and instead make investment decisions based on long-term fundamentals.
In general, we believe that Macron’s presidency should be a positive development for France’s economy and businesses. By resisting protectionist impulses and providing necessary reforms for France’s labour market, Macron’s government has an opportunity to make French companies more competitive in a global marketplace, which should lead to improved long-term returns. We will be reviewing our stock ratings as more details emerge regarding reforms, but at this point we don’t anticipate making wholesale changes to the 1,600+ companies in our coverage universe.
Along the same lines, we are not making any changes to the ratings of funds that receive our Morningstar Analyst Rating for Funds. These ratings are qualitative assessments of funds’ expected long-term performance relative to their respective peer groups. Our views on their fundamental investment merit are unchanged by the outcome of the French election. We recommend that, like stock investors, fund investors avoid making knee-jerk decisions and consider their investments in the context of their long-term objectives and risk tolerance. As always, Morningstar will remain vigilant on the 3,200+ analyst-rated funds, and any significant changes in their intrinsic quality due to this or any other event would be promptly reflected in our ratings.
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