The election campaign is almost over, so what should investors make of the likely outcome - a Labour majority if the polls are right.

We kick off with Stephen Yiu, manager of the Blue Whale Growth global equity fund, who explains what investors can do to mitigate the potential risks.

Then Susannah Streeter, head of money and markets at the UK's biggest investing site Hargreaves Lansdown, looks at the fallout for bonds, stocks, the British Isa, and the industry sectors a Labour government will focus on if it is elected.

Finally, James Norton, head of retirement and investments at tracker fund giant Vanguard, has some reassuring news about the impact of our elections on portfolio performance over nearly four decades.

Malaise is already baked into the UK market

Stephen Yiu, manager of the Blue Whale Growth fund

There are plenty of reasons to fret. The UK is experiencing an increasingly unsteady political backdrop.

Sadly, neither of the main parties are offering much in the way of vision for the UK, and voters are forced to either stick with a party with a track record of disappointing or appoint a new administration in perhaps the misguided hope things will change for the better.

There is certainly nothing from either manifesto that would suggest either hold solutions to get the country's economy back on an even keel.

The predicted outcome, if the polls are to be believed, is a significant Labour majority. This likely means an increased tax burden on companies and the wealthy, restrictions on investment allowances (Isas, pensions) and a greater emphasis on public provision at the expense of the private sector.

Generally, we expect an increase in unfunded government spending, with a weakening pound being one of the likely outcomes.

This is not a rosy picture, but the good news is that this outcome will not be a surprise. Much talk about depressed equity prices in the UK is simply this result being baked-in prior to the event.

Further, political risk in the UK fortunately is a relatively small issue when it comes to the global economy. 

As British citizens we are very attuned to what goes on in our own country, but outside the British Isles, relatively few people are even aware we have an election this year.

So what can investors do to mitigate the potential risks during this coming election? 

At Blue Whale our focus has always been on companies rather than predicting macro-economic developments. It is important we invest in those businesses that transcend the macro environment.

In the fund we invest in a couple of businesses (Microsoft and Nvidia) which would not only be the biggest businesses in the UK should they be listed here, but their individual market capitalisation is bigger than the entire FTSE 100 - as at 1 July 2024.

Whilst the UK is an important market for many of these large global companies, their business models mean that even in times of great economic and political uncertainty, their products remain in stubbornly high demand due to their importance in everyday life - be that work, leisure or a combination of both.

Structural trends around the world are key to driving returns. Having identified them, it is then important you invest in the companies best placed to benefit.

AI is an obvious example of a global structural mega trend, as is silicon sovereignty, general reshoring and the prospect of interest rates rebasing at higher levels. Much has been made of our investment in Nvidia, but companies such as Broadcom, Applied Materials and Mastercard are all beneficiaries of global mega trends.

Currency will be another concern for investors. The good news for those that are globally diversified is that should the pound suffer, their investments denominated in other currencies become worth more as those currencies appreciate against sterling.

Currently, Blue Whale holds less than 5 per cent of the portfolio in sterling denominated shares.

Another thing for investors to remember is short term volatility is always to be expected given any economic or political event.

Such volatility is a risk should you be forced to sell in the short run, but we prefer to consider permanent loss of capital as the only risk which really matters in the long run.

It's important for investors to remember:

1. Malaise is already baked into the UK market;

2. Investments in large, global businesses should be little affected by political outcomes in the UK;

3. Diversification into other geographies means spreading risk, both from an economic perspective, and also currency perspective;

4. Investing in mega trends means we aim to select great businesses with macroeconomic tail winds – a double serving of outperformance potential;

5. Consider the main risk to your investment as permanent loss of capital. Short term volatility around an election is uncomfortable, but good businesses, backed with strong fundamentals should prevail over the longer term.

Labour seems intent on avoiding 'mini-Budget'-style turmoil

Susannah Streeter, head of money and markets, Hargreaves Lansdown:

While chatter around the impact the General Election result is set to ramp up again, the impact on financial markets is likely to stay minimal especially if the current poll predictions materialise.

Even a Labour super-majority is unlikely to dramatically unsettle investors. It would enable the new government to get on with their agenda, which has largely been digested by markets.

Anything other than Labour dominance is more likely to be unnerving given expectations. It could weaken the position of Keir Starmer and his ministers and hamper their ability to drive change.

Shadow Chancellor Rachel Reeves has made it clear that if she becomes Chancellor, she intends to be economically responsible, and focus on stimulating long-term growth, rather than immediate boosts to consumer spending power.

She wants to avoid sparking the kind of bond market turmoil, which erupted after Kwasi Kwarteng's mini-Budget.

That's why there were no surprise announcements in the manifesto, with the party being super-careful about pledging changes to spending or fiscal rules that could rattle financial markets.

The priority will be on keeping the waters calm in the aftermath of the election, even with a super-majority. There may be some minor announcements before an expected budget in the Autumn in a bid to build trust.

There is more of a risk of market turbulence after a few years of a new government bedding in, especially if the economy took a turn for the worse and the tax take dips.

It would be very hard for Labour to cut services and do anything drastic with public spend and they appear to be in a bit of a tight spot with their fiscal commitments.

However, Rachel Reeves has suggested that in the future borrowing rules could distinguish between day-to-day spending and investment to propel long-term growth, potentially loosening the purse strings to further support and partnerships with the private sector, above and beyond the current manifesto commitments.

So far, such indications do not seem to have perturbed the debt markets, with bond investors appearing to be more sensitive to interest rate speculation than the investment plans of an incoming government.

There has been a lot of talk about the potential for a British Isa to help kickstart more investment into the London Stock Exchange – however, there was no mention of it in the major parties' manifestos.

Both Labour and the Conservatives have said they want to encourage saving and investing. This could be done through lifting the overall ISA allowance, rather than introducing another layer of complexity.

If the aim is to make investing in UK equities more attractive, there are other measures which could be used. All too often, retail investors are cut out of IPOs and secondary capital raising rounds.

It's essential that the FCA Review of the listing regime puts improving retail investors' rights at its heart.

There was no mention in the manifestos of cutting stamp duty on UK share purchases or increasing the dividend or capital gains tax allowances, which may disappoint some investors.

Although the NatWest share sale has been put on ice, due to the General Election campaign, it was mentioned in the Conservative manifesto as still being part of the plan. It was omitted from the Labour manifesto but there are hopes it will still progress.

Schemes like this have the power to encourage new investors, so ideally this will be revisited. Research from HL shows that past privatisation schemes brought in newcomers and super-charged investing habits for many novice shareholders.

Twenty five per cent of people say they invested in privatisations between the late 1970s and 2014. Of this group, a third of people (34 per cent) still hold at least one of the companies they invested in, so schemes like this do have the power to incentivise people to start on an investment journey.

Labour plans to establish Great British Energy, a publicly owned clean power firm, funded by increasing the windfall tax on oil and gas company profits from the North Sea.

It also wants to draw new licensing rounds to a close, limiting future revenue streams for companies operating on the UK's continental shelf. The oil majors benefit from diversity, so will face limited impact, but smaller players may need to rethink their strategy.

Investors will want to see producers focus on profits from existing operations, while ploughing capital into future facing technologies. Electrification will be a growing trend - benefiting electric vehicle manufacturers, infrastructure providers that can support network demand, utilities and energy services companies.

Under a Labour administration water companies could face higher fines if they fail to clean up waterways and mend leaks, and executives could lose their bonuses.

Already the cost of repairs and upgrades weighs heavily on firms, and mandatory investments in service levels will keep demands on cash resources high.

Investors should keep an eye out for regulator Ofwat's five-year price review after the election. This will not only set out price controls but also service level and investment requirements.

Labour's pledge to build 1.5million new homes by shaking up the planning system would benefit housebuilders facing slow approvals of new sites - although it remains to be seen how quickly this can be done.

High mortgage costs have heaped pain on housebuilders, so with rates likely to have peaked, there are signs of a recovery. However, that's broadly reflected in valuations, so investors could be sensitive to disappointments.

The outcome of the general election may see some industries more affected than others. As ever to ensure you're not overly exposed to any particular risk, it's important to maintain a diversified portfolio.

Ultimately, the attitude investors should take amid some uncertainty about what could lie ahead under a new administration is keep calm and carry on. Keep your eye on long-term goals, and stay diversified across a range of sectors, asset classes and geographies.

Elections have minimal impact on portfolio performance

James Norton, head of retirement and investments at Vanguard

Investors should ignore election noise. There's no statistical difference between election and non-election periods.

We analysed the performance of a balanced portfolio of 60 per cent UK shares and 40 per cent UK bonds between January 1987 and May 2024.

During that time, there have been 10 general election periods in the UK (including the election on 4 July).

We looked at portfolio performance in the period from the five months before each election to the five months after and then compared this with performance during other times.

We found no statistical difference in portfolio performance. The annualised compound return for election periods was 7.8 per cent. During other times, it was 7.3 per cent.

We also analysed the performance of UK and global stock markets between January 1995 and December 2023, during which period there were seven general elections.

The chart below shows that the elections had a minimal impact on stock market performance.

The events that impacted the stock market the most were of a much bigger, global scale. 

These included the bursting of the dot-com bubble when technology stocks fell after a rapid rise in valuations in the late 1990s, the global financial crisis in 2007-09 and the Covid-19 pandemic in 2020.

When it comes to investing, it's important to keep perspective, stay disciplined and focus on your long-term goals.

Trying to time the market rarely pays off. Even very experienced investors struggle to get it right.

As the chart below shows, the best and worst days in the market tend to occur close together. In many cases, the green bars, which represent the 20 worst trading days, look like mirror images of the gold bars, which signify the best trading days.

By trying to time the market, you run the risk of missing out on strong performance, which can seriously hamper long-term investment success.

This is why discipline is one of Vanguard's four investing principles - think about goals, stay balanced, keep costs low and be disciplined.

Discipline means sticking to your investment plan and reviewing it regularly to make sure it stays aligned to your goals, situation or stage in life.

It's natural to have concerns about elections, but as far as your portfolio and the markets are concerned, history suggests they are a non-issue.

By tuning out the noise and maintaining a long-term outlook, you can keep progressing towards your financial goals.