By Heidi Richardson

It seems as if in every meeting I have had lately with clients, questions about the upcoming U.S. election and its implications for markets are the first to come up. And while I won’t opine on who will be the likely winner, I will discuss some of the potential broader market impacts of this rather contentious debate.

The November election will be historic in many ways, but the long-term implications of either Hillary Clinton or Donald Trump winning will likely have less of an impact than many market participants are anticipating. If history is any guide, election results have had a relatively minimal impact on longer-term U.S. or global equity returns, according to Bloomberg data and the BlackRock Investment Institute. It also hasn’t seemed to matter much whether the president belongs to the Republican or Democratic Party.

Instead, factors such as inflation, interest rates and global growth are much more important to markets. And while these areas are a focal point for Federal Reserve (Fed) policy, they remain largely outside of presidential control, except to the extent that the president nominates (and the Senate approves) the Fed chairman and governors.

Nevertheless, we do expect some short-term market volatility leading up to the election and will keep an eye on certain sectors – health carefinancials and infrastructure, for example––which thus far have been hot topics for the candidates. Since real policy changes wouldn’t likely occur until 2017 (and beyond), this short-term volatility may create more attractive entry points in select areas that appear attractive.

The potential for higher volatility comes against a backdrop of an unusually quiet month for U.S. stocks, as my colleague Russ Koesterich recently wrote about. We expect volatility to pick up from these extremely low levels and the election rhetoric may just be the trigger.

Careful with health care and financials

Although volatility is likely to persist across the broad market, specific sectors may be particularly vulnerable, or conversely, offer some opportunity. Among those to be cautious on is health care. The sector has historically underperformed in election years (source: Bloomberg), due in large part to concerns over pricing pressure on the biotech and pharmaceuticals subsectors. The latest headlines over EpiPen pricing have renewed this focus and brought with it increased volatility.

Over the short term, we don’t believe that the election and a new president will have a big impact on health care stocks’ fundamentals. Given the two candidates’ opposing views on health care, however, there could well be longer-term implications on policy changes. But remember that implementing any real, significant changes to the health care system will need to pass through Congress and will likely take years, not months. That said, volatility and fundamentals aren’t always aligned and a selloff triggered by regulation rhetoric may create selective buying opportunities in the near term.

Financials could also be impacted in a similar fashion. Again, meaningful regulations could take time, but campaign rhetoric may increase volatility. We believe the path of the Fed’s rate hike policy will have a bigger effect on the sector’s fundamentals. While we expect one more interest rate hike this year given Fed Chairwoman Janet Yellen’s most recent comments at Jackson Hole, financials may benefit from widening net interest margins (the spread between what banks make on loans and what they pay for deposits.)

More attention on infrastructure

So where can investors find potential opportunities? Perhaps infrastructure spending, a rare area of agreement between the two candidates (although they disagree on how to fund such spending). As the campaign debate continues to discuss job creation and economic growth, there has been a renewed investor focus on infrastructure spending and transportation. Additionally, Fed Governor John C. Williams of San Francisco recently published a paper suggesting a shifting focus from monetary policy to fiscal policy and an emphasis on economic growth and a higher inflation target. This likely bodes well for the sector. But keep in mind: There could be significant delay from a proposal of greater infrastructure spending to passage of a bill and actual disbursement of money.