Tensions in Washington may not derail an important piece of legislation that could drive stocks further into record territory, according to the manager of $400 billion in assets.

Eaton Vance’s Eddie Perkin is betting that the Trump tax cuts will become a reality, and he’s positioning his portfolio to cash in on it.

“There is more upside from it passing than downside from it not passing. The best bet is still that we get at least some modest tax cut out of Washington,” Perkin said Wednesday on CNBC’s “Trading Nation.”

Perkin, Eaton Vance’s chief equity investment officer, estimates a package could pass by early 2018 because Democrats and Republicans have a lot at stake.

“They’ll be facing the voters again in the fall, and they’ll need to show some progress on one of these major legislative items,” he said.

And, that bodes well for a resurgence in the “Trump trade,” which began winding down in March. That’s when financials had their first negative month since the November presidential election.

Despite the lull, the markets have been surging under President Donald Trump. The Dow is up 20 percent, the S&P 500 has gained 15 percent and the Nasdaq has soared 22 percent since he won.

But if investors stick with what’s been working, then they may miss out on big gains. Perkin doesn’t think Trump’s policies have had much to do with the rally — at least not yet.

“I question whether it’s really driven by policy as much as easy money, good corporate profits and the market climbing a wall of worry,” he said.

Perkin is staying away from big cap technology stocks and health care. He believes the recent winners won’t see much upside from Trump’s tax cut policies.

He likes recent laggards — particularly small caps, regional banks and telecom companies. Perkin notes that most of their businesses are done domestically, so they stand to benefit the most from tax reform.