SPDR ETFs Election Chart Pack - Key Charts to Navigate the 2020 Election - State Street Global Advisors

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SPDR ETFs
Election Chart Pack

Key Charts to Navigate the 2020 Election

For Investment Professional Use Only

                                           3236518.11.1.AM.INST   1
S&P 500 Performance Under Different
Control Scenarios
Average Annual Performance                                                                   S&P 500 Post-Election Avg. Performance (1948 – 2017, Cumulative %)

                                                       1933 – 2019                                                        Post-   Post-Election   Post-     Post-
                                                                                                                        Election    First-Year  Election Election      No. of
                                                                                                                         Returns     Return     Two-Year Three-Year    Times
       Political Scenarios               % Change             Number of Years                                          (Nov - Dec) (Jan - Dec)   Return    Return

Unified Government                         10.03%                       42                    Democratic President        1.91         19.75        32.36      56.25     8

  Democratic President                      9.34%                       34                         Democratic
                                                                                                                          1.39         15.38        22.83      48.32     6
                                                                                                   Congress
  Republican President                     12.95%                       8                          Republican
                                                                                                                          5.42         33.34        71.43     107.49     1
                                                                                                   Congress
Unified Congress                            7.42%                       32
                                                                                                   Split Congress         1.49         32.37        50.48      52.55     1
  Democratic President                     12.96%                       10
                                                                                              Republican President        3.60         3.86         14.19      37.75    10
  Republican President                      4.91%                       22
                                                                                                   Democratic
                                                                                                                          2.80         -0.53        3.17       25.87     4
Split Congress                             10.38%                       12                         Congress
                                                                                                   Republican
                                           13.60%                       4                                                 7.80          8.6         29.59      59.86     3
  Democratic President                                                                             Congress

  Republican President                      8.77%                       8                          Split Congress         0.46         4.97         13.50      31.49     3

All Years                                   9.11%                       86
                                                                                                A split Congress has been the most beneficial to the S&P 500’s
                                                                                                performance when a Democrat has been in the White House
Source: Strategas, as of August 31, 2020. Past performance is not a guarantee of future results. Data excludes 2001 due to Sen. Jeffords changing parties midyear

                                                                   3236518.11.1.AM.INST     2
S&P 500 Performance History, Recessions
and Election Outcomes
S&P 500 Performance 3 Months Prior to the Election, by Outcome                              S&P 500 Performance Since 8/03/2020
(1928 – 2016)                                                                                                        3,600
                    3 Months Prior                                                                                   3,550
                                           Incumbent              Economic
  Election Year     to Presidential
                                            Win/Loss              Recession                                          3,500
                       Election
       2016              -1.90%                Loss
                                                                                                                     3,450
       2012               2.45%                Win
       2008             -19.48%                Loss                Recession                                         3,400
       2004               2.16%                Win
       2000              -3.21%                Loss                                                                  3,350

                                                                                               S&P 500 Index Level
       1996               8.17%                Win
                                                                                                                     3,300
       1992              -1.22%                Loss
       1988               1.91%                Win                                                                   3,250
       1984               4.80%                Win
       1980               6.73%                Loss                Recession                                         3,200
       1976              -0.09%                Loss
                                                                                                                     3,150
       1972               6.91%                Win
       1968               6.45%                Loss                                                                  3,100
       1964               2.63%                Win
       1960              -0.74%                Loss                Recession                                         3,050
       1956              -2.58%                Win
       1952              -3.26%                Loss
       1948               5.36%                Win                 Recession
       1944               2.29%                Win
       1940               8.56%                Win
                                                                                               Historically, when the S&P 500 gained three months prior to the
       1936               7.92%                Win
                         -2.56%                Loss                Recession
                                                                                               election, the incumbent party won, with few exceptions.
       1932
       1928             14.91%                 Win                                             Only once has an incumbent won during a recession
Source: Strategas, as of August 31, 2020. S&P Index performance for 2020 as of 10/30/2020. Past performance is not a guarantee of future results. Data excludes 2001 due to Sen.
Jeffords changing parties midyear. 08/03/2020 was picked because it will be exactly three months before the election date on 11/03/2020.

                                                                  3236518.11.1.AM.INST     3
Contested Elections
The contested election in 2000 may provide insight if the same happens in 2020, as
back then, it created considerable uncertainty and led to equities selling off

Equity Market Performance During the 2000 Recount                                                                                        Bond and Gold Performance During 2000 Recount
(11/07/2000 – 01/31/2001)                                                                                                                (11/07/2000 – 01/31/2001)
                     10%                                                                                                                                     10%

                                                                                                                                                             8%
                             5%

                                                                                                                                Normalized Performance (%)
                                                                                                                                                             6%
Normalized Performance (%)

                                                                                                                                                             4%
                             0%
                                                                                                                                                             2%

                             -5%                                                                                                                             0%

                                                                                                                                                             -2%
           -10%
                                                                                                                                                             -4%

           -15%                                                                                                                                              -6%

                                   S&P 500 Index                                    Russell 2000 Index                                                             Core Agg Bonds   US Treasuries   Long-term US Treasuries
                                   MSCI EAFE Index                                  MSCI Emerging Markets Index
                                                                                                                                                                   Gold             US High Yield
                                   S&P 500 Low Volaitlity Index (Lowest Quintile)   S&P 500 Quality Index (Highest Quintile)

Source: Bloomberg Finance, L.P. Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of
any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. S&P 500: S&P 500 Index; Gold: LBMA Gold Price;
Russell 2000: Russell 2000 Index; Agg: Bloomberg Barclays US Agg Index; US Treasuries: Bloomberg Barclays US Treasury Index; EAFE: MSCI EAFE Index; Emerging Markets: MSCI
Emerging Markets Index; VIX: VIX Index. S&P 500 Low Volatility Index: The Low Vol basket consists of S&P 500 stocks ranked at bottom quintile based on volatility. S&P 500 Quality
Index: Basket consisting of S&P 500 stocks ranked at highest quintile based on quality

                                                                                                         3236518.11.1.AM.INST   4
Election Volatility
Option markets are pricing in an increase in market volatility ahead of the election
in November, consistent with historical volatility trends in election years.

Historical Monthly Realized Volatility (1929 – 2019)                                                                VIX Futures Levels Measured at Different Times
                                                                                                                                                                                   10/29/2020
                                        4.5                                                                                         34.0
                                                Election Year Average                                                                                                              10/16/2020
                                                Non-Election Year Average
                                                                                                                                                                                   9/30/2020
                                        4.0                                                                                         33.0

                                        3.5                                                                                         32.0
  Daily Return Standard Deviation (%)

                                        3.0                                                                                         31.0

                                                                                                                    Futures Level
                                        2.5                                                                                         30.0

                                        2.0                                                                                         29.0

                                        1.5                                                                                         28.0

                                        1.0                                                                                         27.0

                                        0.5                                                                                         26.0

                                                                                                                                    25.0
                                        0.0
                                                                                                                                           Nov.-2020   Dec.-2020      Jan.-2021   Feb.-2021
                                              Jan Feb Mar Apr May Jun       Jul   Aug Sep Oct Nov Dec
                                                                                                                                                       Future’s Expiration Date

Source: Bloomberg Finance, L.P, as of 10/30/2020.

                                                                                         3236518.11.1.AM.INST   5
Presidential Polls
With days remaining before Election Day, Biden is ahead with a large margin in half
of the swing states and national polls against Trump

COVID-19 Cases vs. Polling, Year to Date                                                                                                 Biden vs. Trump Avg. Poll Differences in Swing States
                                                    5-Day Changes to Confirmed COVID-19 Cases                                                                                                                            9/23/2020        10/23/2020
                                                                                                                                                                           6.50    6.30               6.40
                                                    Biden vs. Trump National Avg. Poll Differences
                                                                                                                                                                                               5.50
                                                                                                                                                                      5.00
                                              400                                                    12%
                                                                                                                                                                                       4.30
                                                                                                                                                                                                                            3.00
                                              350
                                                                                                     10%
 5-Day Change in COVID-19 Cases (Thousands)

                                                                                                                                                                                                              1.40 1.20
                                              300                                                                                                                                                                                          0.500.60
                                                                                                                                                                                                                                   0.00
                                                                                                     8%

                                                                                                           Average Poll Difference
                                              250                                                                                                                          MI         PA          WI            FL            AZ             NC

                                                                                                                                         Trump Presidential National Avg. Poll vs. Job Approval Avg. Poll
                                              200                                                    6%

                                                                                                                                                                        Job Approval Avg. Poll         Trump 2020 US Presidential Avg. Poll
                                              150

                                                                                                                                          National Poll Average (%)
                                                                                                     4%                                                               48                                                                       46

                                                                                                                                                                                                                                                       Job Approval Poll (%)
                                              100                                                                                                                                                                                              45
                                                                                                                                                                      46
                                                                                                     2%                                                                                                                                        44
                                               50
                                                                                                                                                                      44                                                                       43

                                                                                                                                                                                                                                               42
                                                0                                                    0%                                                               42
                                                                                                                                                                                                                                               41

                                                                                                                                                                      40                                                                       40
                                                                                                                                                                      12/31/2019   2/29/2020   4/30/2020     6/30/2020     8/31/2020
Source: Bloomberg Finance, L.P.; RealClearPolitics, as of 10/30/2020.

                                                                                         3236518.11.1.AM.INST                        6
Congressional Race
Current betting odds showed a higher probability of Democrat-controlled senate and
White House lately

Probability for House Control                                          Probability for White House Victor                      Probability for Democratic Sweep*

 100%                                                                  80%                            Trump Victory (%)          45%
                                                                                                      Biden Victory (%)

                                                                       70%                                                       40%

  80%
                                                                                                                                 35%
                                                                       60%

                                                                                                                                 30%
                                                                       50%
  60%
                                                                                                                                 25%
                                                                       40%
                                                                                                                                 20%
  40%
                                                                       30%
                                                                                                                                 15%

                                                                       20%
  20%                                                                                                                            10%

                                                                       10%
                   US PredictIt 2020 Senate Party Control Democratic                                                              5%
                   US PredictIt 2020 Senate Party Control Republican
                   US PredictIt 2020 House Party Control Democratic
                   US PredictIt 2020 House Party Control Republican
   0%                                                                   0%                                                        0%
    Jan-20          Apr-20              Jul-20             Oct-20        Feb-20          May-20       Aug-20                       Feb-20           May-20           Aug-20
Source: PredictIt Odds as of 10/30/2020.* The probability of Democratic sweep is calculated by multiplying the probability of Democratic Senate, Democratic House and Biden’s win of
presidential election.

                                                                           3236518.11.1.AM.INST   7
Senate Race
Democrats need to have a net gain of four seats to control the Senate, and based on
538.com forecasts key swing states are leaning blue.

Probability Distribution of Senate Seat Outcomes                                               Probability for Key Swing States

              16                              80% of outcomes fall
                                       52 R   within this range             55 D     Current Party               Democrat Win Probability

              14                                                                          R     Colorado                  85%

                                                                                          R     Arizona                   80%
              12

                                                                                          R     North Carolina            62%
              10
Probability

                                                                                          R     Maine                     60%

              8
                                                                                          R     Iowa                      54%

              6                                                                           R     Montana                   44%

                                                                                           D    Alabama                   23%
              4

              2
                                                                                            35 seats are up for grabs, 23 are
                                                                                            currently held by Republicans and 12
              0                                                                             by Democrats
                   60 59 58 57 56 55 54 53 52 51 50 51 52 53 54 55 56 57 58 59 60 61 62

                                                 # of Seats

Source: 538.com as of 10/30/2020

                                                         3236518.11.1.AM.INST   8
Election Results Uncertainty
With the unprecedented number of mail-in voting and non-traditional voting styles, many
doubt that election results will be called on election day

Probability that Election results will be announced, by date (%)
                                                                                       Despite the increase in absentee voting, markets estimate
                                                                                       that the result will be clear on November 4th.
    45%

    40%

    35%

    30%

    25%

    20%

    15%

    10%
       Aug-20               Sep-20   Sep-20        Sep-20              Sep-20        Oct-20        Oct-20          Oct-20         Oct-20

                     November 3rd       November 4th                November 5th - November 31st            December 1st - December 31st

Source: PredictIt as of 10/29/2020

                                                       3236518.11.1.AM.INST     9
2020 Market-Based Election Issues
       Issues                                  Democratic Sweep                                            Republican Status Quo

                         • Biden’s pandemic response plan includes                          • Trump’s renewed emphasis on further weakening
                           greater production of equipment, testing and                       the Affordable Care Act may alleviate relative
                           tracing – as well as pursuing novel treatments.                    headline risk for broad health care.
Health Care
                         • If necessary, he could use executive orders to                   • The same is true for specific health services and
                           implement his plans.                                               insurance firms

                Biden is advocating for modern and sustainable       • Expect increases in more traditional infrastructure
                infrastructure through:                                spending to rebuild airports, highways, railroads,
                        • $2 trillion infrastructure plan seeking to   and bridges.
Clean Energy                                                         • Expect little support for clean energy, as Trump
                          achieve carbon neutrality in the US power
/Infrastructure                                                        likely would continue to pursue looser
                          sector by 2035                               environmental policies.
                        • Shift toward electric vehicles             • However, traditional energy firms may still be hurt
                        • Reinstate environmental regulations          by global supply/demand trends.

                         • Antitrust legislation could impact mega cap, tech • Antitrust concerns could become just a headline
                           conglomerates                                       risk for mega-cap tech. firms
Technology
                         • This may lead to growth opportunities for smaller
/Antitrust                 innovative tech-related firms                     • This could lead to little impact on mega-cap tech
                                                                               conglomerates’ ability to generate cash flow.

Source: State Street Global Advisors, SPDR Americas Research.

                                                                3236518.11.1.AM.INST   10
2020 Market-Based Election Issues
       Issues                                  Democratic Sweep                                           Republican Status Quo

                         • A likely reprieve of punitive tit-for-tat tariffs could •           More hawkish trade rhetoric and additional tariffs
                           be growth positive for regions most impacted by                     are likely.
                           the current tariffs.
                                                                                           •   This could dampen sentiment for overseas
 Trade/         • Given the White House’s sweeping trade
                  powers, Biden could exert his influence even                                 exposures and sectors that rely on global supply
 Foreign Policy
                  without Congressional support.                                               chains (i.e., industrials).

                                                                                           •   But benefit more domestically oriented markets,
                                                                                               such as small and midsize firms.
                         • Biden has called for higher corporate and                       • Even before the virus-induced economic downturn,
                           individual tax rates.                                             the Trump administration was openly discussing a
                                                                                             second tax cut to entice companies to bring jobs
                         • Sectors with low effective tax rates may be less                  onshore.
                           impacted.
 Taxes                                                                                     • Corporate tax cuts could boost earnings for sectors
                         • Higher tax rates may benefit tax-exempt                           with high tax rates.
                           securities.
                                                                                           • Lower individual tax rates may fuel more consumer
                         • If Republicans retain control of the Senate,                      spending.
                           Biden’s tax plan may not come to fruition.

Source: State Street Global Advisors, SPDR Americas Research

                                                               3236518.11.1.AM.INST   11
Clean Energy and Dem. Control
Biden’s advocacy for modern and sustainable infrastructure is pushing up the clean
energy industry

Clean Energy vs. Biden Odds

                                      180                                                                                                                                   73%

                                      170
                                                                                                                                                                            68%

                                      160
  Relative Performance (Base = 100)

                                                                                                                                                                            63%
                                      150

                                                                                                                                                                                   Probability (%)
                                      140                                                                                                                                   58%

                                      130                                                                                                                                   53%

                                      120
                                                                                                                                                                            48%
                                      110

                                                                                                                                                                            43%
                                      100

                                       90                                                                                                                                   38%
                                        Mar-20   Apr-20      May-20             Jun-20            Jul-20             Aug-20                Sep-20                Oct-20

                                                          S&P Kensho Clean Power Index / S&P 500 Index              Biden - Win Probability

Source: Bloomberg Finance L.P., calculated by State Street Global Advisors, as of 10/30/2020. Biden win probability is calculated with PredictIt data. Performance quoted represents
past performance, which is no guarantee of future results.

                                                                           3236518.11.1.AM.INST   12
Tax Policy Impacts
Sectors with low effective tax rates may be less impacted by potential higher
corporate tax rates under a Democratic Sweep scenario.

Average of 2019 Tax Rate, by Sector                                                             Relative Performance: High Tax vs. Low Tax
                                                                                                                                       Low Vs. High Tax Basket
                                                                                                                                       PredictIt Biden's Probability to Win
   59%
                                                                                                                                                                                          80%
                                                                                                                                1.13
                                                                                                                                                                                          70%
                                                                                                                                1.11

                                                                                                   Relative Performance Ratio
                                                                                                                                1.09                                                      60%

                                                                                                                                                                                                Probability (%)
                                                                                                                                1.07                                                      50%
                                                                                                                                1.05                                                      40%
           29%
                   27%                                                                                                          1.03
                                                                                                                                                                                          30%
                          21%     20%    20%     20%                                                                            1.01
                                                         19%    18%     18%                                                                                                               20%
                                                                                                                                0.99
                                                                                                                                0.97                                                      10%

                                                                                4%                                              0.95                                                      0%

                                                                                                Top 3 Sectors

                                                                                                Low Tax Basket                                        Real Estate         Tech.      Health Care
                                                                                                High Tax Basket                                       Industrials      Cons. Disc.     Energy

Source: FactSet, Bloomberg Finance L.P., calculated by State Street Global Advisors, as of 10/30/2020. Low and high tax baskets consist of equal-weighted top and bottom quintile
securities based on their 2019 tax rate, respectively. Past performance is not a guarantee of future results.

                                                                    3236518.11.1.AM.INST      13
Trade Policy Impacts
Under a Democratic sweep scenario, tariff-led pressures on Chinese equities may be
reduced. Conversely, more domestic segments may benefit under the status quo.

S&P China BMI Performance Relative to the S&P 500 During US-China Trade War                                        Foreign Revenue Exposure per S&P Style Box

105               25% tariffs on all steel imports
                  and 10% on aluminum imports
                                                                                                                                     Value           Blend   Growth
100

                                                                     Increase Chinese tariffs
 95                                                                  from 10% to 25%
                                                                                                                   Large              30              33      37
 90

 85
                                                                                                                   Mid                22              24      24
 80
         25% tariffs on
         818 Chinese
 75      products
                                                                                                                   Small              20              21      23
 70
  Mar-18        Jun-18        Sep-18       Dec-18        Mar-19         Jun-19           Sep-19   Dec-19

Source: Bloomberg Finance L.P., FactSet, as of 8/31/2020. Performance quoted represents past performance, which is no guarantee of future results.

                                                                  3236518.11.1.AM.INST      14
Appendix

Important Disclosures
The views expressed in this material are the views of SPDR Americas Research Team                  of the security may not rise as much as companies with smaller market capitalizations.
and are subject to change based on market and other conditions. This document contains
certain statements that may be deemed forward-looking statements. Please note that any             The trademarks and service marks referenced herein are the property of their respective
such statements are not guarantees of any future performance and actual results or                 owners. Third party data providers make no warranties or representations of any kind
developments may differ materially from those projected.                                           relating to the accuracy, completeness or timeliness of the data and have no liability for
                                                                                                   damages of any kind relating to the use of such data.
The information provided does not constitute investment advice and it should not be relied
on as such. It should not be considered a solicitation to buy or an offer to sell a security.      The whole or any part of this work may not be reproduced, copied or transmitted or any of
It does not take into account any investor’s particular investment objectives, strategies, tax     its contents disclosed to third parties without SSGA’s express written consent
status or investment horizon. You should consult your tax and financial advisor.                   Standard & Poor’s, S&P and SPDR are registered trademarks of Standard & Poor/s
All material has been obtained from sources believed to be reliable. There is no                   Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones
representation or warranty as to the accuracy of the information and State Street shall            Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use
have no liability for decisions based on such information.                                         by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State
                                                                                                   Street Corporation. State Street Corporation’s financial products are not sponsored,
All the index performance results referred to are provided exclusively for comparison              endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and
purposes only. It should not be assumed that they represent the performance of any                 third party licensors and none of such parties make any representation regarding the
particular investment.                                                                             advisability of investing in such product(s) nor do they have any liability in relation thereto,
Bonds generally present less short-term risk and volatility than stocks, but contain interest      including for any errors, omissions, or interruptions of any index.
rate risk (as interest rates rise, bond prices usually fall); issuer default risk; issuer credit
risk; liquidity risk; and inflation risk. These effects are usually pronounced for longer-term
securities. Any fixed income security sold or redeemed prior to maturity may be subject to         State Street Global Advisors Funds Distributors LLC, member FINRA, SIPC.
a substantial gain or loss.
                                                                                                   State Street Global Advisors, One Iron Street, Boston, MA 02210.
The values of debt securities may decrease as a result of many factors, including, by
                                                                                                   Tracking Code: 3236518.11.1.AM.INST
way of example, general market fluctuations; increases in interest rates; actual or
perceived inability or unwillingness of issuers, guarantors or liquidity providers to make         Expiration Date: December 31, 2020
scheduled principal or interest payments; illiquidity in debt securities markets; and
prepayments of principal, which often must be reinvested in obligations paying interest at
lower rates.
Equity securities may fluctuate in value in response to the activities of individual
companies and general market and economic conditions.
Foreign (non-U.S.) Securities may be subject to greater political, economic,
environmental, credit and information risks. Foreign securities may be subject to higher
volatility than U.S. securities, due to varying degrees of regulation and limited liquidity.
These risks are magnified in emerging markets.
Investments in small-sized companies may involve greater risks than in those of larger,
better known companies.
Companies with large market capitalizations go in and out of favor based on market
and economic conditions. Larger companies tend to be less volatile than companies
with smaller market capitalizations. In exchange for this potentially lower risk, the value

                                                                          3236518.11.1.AM.INST     15
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