Within T. Rowe Price, our Public Policy Research team supports our analysts and portfolio managers through all stages of the investment process. We work closely with our environmental, social, and governance (ESG) team to integrate policy catalysts and risk factors into the Responsible Investing Indicator Model (RIIM), while helping our investors assess the likely outcomes and implications of legislative, regulatory, and legal decisions for their company holdings and sectors.
Concerns around US policy remain, but of a different nature
Between 2016 and 2020, we experienced a marked increase in concern from investors regarding the political volatility driving the legislative and regulatory environment. Despite this spike in economic policy uncertainty, the US equity market still marched higher - with the S&P 500 Index gaining more than 1,000 points (Fig. 1).
As 2021 has progressed, investors have expressed concern regarding the legislative and regulatory backdrop, but for an entirely different reason: crisis management. With the coronavirus pandemic came a level of market and economic uncertainty that continues to transform investors' expectations about the future - what a "new normal" might look like for the global economy and what tools different governments will use to get to a postcrisis environment.
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