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2 weeks until the general election! Which FTSE 100 stocks should I add to my ISA?

The countdown is really starting to happen as we head into the last fortnight before the general election. Like myself, you have probably noticed leaflets coming through the letterbox, and maybe even a knock at the door from a bold campaigner. 

Last week we saw the manifestos from both major parties released. Labour had the eye-catching four day working week proposal, which they claim will be offset by productivity increases, meaning FTSE 100 bosses shouldn’t necessarily worry. 

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For the Conservatives, they have pledged an overhaul of the current business rates charged, but this would largely benefit SMEs, so would be of limited benefit for large FTSE 100 companies.

As we gear up for the home straight, below are a few of my thoughts on how I would be positioning heading into the election.

Buy domestic

A friend of mine recently made a very valid point that regardless of who wins the election, domestic businesses should see an overall share price increase. His reasoning was that if it is the Conservatives who retain power, then with a majority they will be able to vote through the Brexit bill and the uncertainty regarding Brexit could be finished quite quickly.

On the other hand, if we see Labour win, they have promised a second referendum, with ‘Remain’ in some form on the ballot paper. If indeed it looked likely in the polls that Remain was the favoured choice, then again domestic stocks should perform well on the premise of no Brexit at all!

I did stress to him that hypothetical thinking will only get him so far when investing, but I do agree that it resonates well for a tactical idea of buying domestic companies within the FTSE 100. Good examples can be seen in Lloyds Banking Group and Barratt Developments. These firms all have a high exposure to the UK.

Buy defensive

If you are wanting to buy stocks ahead of the election then I would personally prefer to allocate some funds to defensive stocks. When I say defensive, I am referring to a stock whose performance is usually uncorrelated to broad economic events. 

Take supermarkets such as Tesco and Sainsburys for example. These firms have a fairly linear demand from people like you and me. Will I stop buying my milk and bread if Labour win the election? Of course not. So I would be looking at companies such as these in order to protect myself from volatility around the election time.

I wouldn’t go 100% into defensive stocks as it is a bit restrictive, but some form of allocation here I think is wise.

In conclusion, the race for 10 Downing Street is still uncertain. With volatility expected, I would look to buy into domestic firms such as the ones mentioned above, and also allocate some funds to defensive stocks. Thus, I would be confident of coming out of the other side of the election with my ISA holdings in good shape.

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Jonathan Smith owns shares in Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking Group, and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.