While the overall economic growth outlook is unlikely to change significantly based on the election, specific sectors face distinct risks. Power and data center REITs are tied to AI policy, while consumer and healthcare sectors are exposed to potential changes in SNAP and Medicaid.

New Mountain Capital holds a formal process every year to reassess its target sectors. This discipline leads them to abandon previously lucrative areas, like post-secondary education, when long-term headwinds emerge, ensuring capital is always deployed in areas with tailwinds.

The shift in investor preference from technology stocks to "hard asset" sectors is validated by ETF flow data. In Q1 2026, the top sectors for inflows were energy, materials, and industrials, indicating a tangible diversification away from big tech.

The sectors that outperform in the initial year of a new presidential administration can provide a roadmap for market trends over the subsequent years. This political-macro overlay suggests focusing on current leaders, like metals, for sustained performance.

Amid political polarization, explicit ESG investing has faded. However, capital continues to flow into energy projects under the more neutral label of "infrastructure." This allows investors to support traditional and transitional energy development while avoiding the controversy associated with the ESG moniker.

Investors should not over-react to congressional turbulence. Many of the most market-relevant policies—on trade, regulation, industrial strategy, and AI—are executed via executive authority, not congressional action. This means their trajectory is unlikely to be altered by events like a shutdown or shifting political dynamics in Congress.

In an era of financial repression and heavy government intervention, the most effective investment strategy is to identify sectors receiving direct government support. By positioning capital near these "money spigots," investors can benefit from policies designed to manage the economy, regardless of traditional market fundamentals.

To identify companies benefiting from a theme like deregulation, modern ETFs employ AI to screen earnings call transcripts. This data-driven approach quantifies how often company executives mention the theme, providing a more objective filter for stock selection than relying on sector analysis alone.

Launching a successful ETF requires identifying future hot themes, like the hockey analogy of skating to where the puck will be. More specifically, the key is to pinpoint the underlying bottlenecks that others haven't realized yet, such as the need for physical space for data centers driving a space-related ETF.