UK funds feel the Brexit effect, but FX remains best barometer
By International Adviser, 16 Jun 16
With Brexit now less than two weeks away, the volume of commentary finding its way into our sister publication Portfolio Adviser’s inbox is growing rapidly. For your convenience they have placed all the most interesting investment ideas into one place .
Pragmatism before emotions – Stanes
Michael Stanes, Heartwood’s investment director, argued that both the UK electorate and investors have tended to let emotion and sentiment override pragmatic decision making during the course of the Brexit debate.
Though it is easy to get swept up in the uncertainty, political rhetoric and raw tension of it all, Stanes said it is important for investors to remember that economic data has been improving globally.
For instance, Stanes noted the consumer appears to be returning both in the US and UK, resulting in healthier retail sales than either market has seen in several financial quarters. And there are signs of improvement in both labour markets, as well as the US manufacturing and the UK industrial sectors, he said.
Similarly, in the Eurozone, consumers are starting to see the benefits from the ECB’s stimulus measures coupled with improved labour market conditions, low inflation and decreasing oil prices, Stanes added.
Because there are copious unknowable variables surrounding the post-referendum landscape, Stanes underscored that portfolios need to be pragmatically positioned.
Specifically, portfolios should be “able to defend in periods of capital loss and take advantage of valuation opportunities where there is fundamental justification,” he said. “And it is at times like these when a multi-asset class investment strategy enables investors the flexibility to make those choices.”
In particular, Stanes recommended raising cash and moving into more liquid instruments like large-cap equities, reducing overall levels of equity, property and currency risks and maintaining a short duration position in bonds.
Tags: Axa | Brexit | Hargreaves Lansdown | Lipper | Neil Woodford
