Brexit: The unfolding story
05 July, 2016
United Kingdom's shock decision to leave the European Union late last month after months of bitter campaigning has not only made for glorious news headlines, it has also led to falls in share markets and the UK pound and caused market volatility around the world.
Markets, just like most people, don't respond well to change so what we're seeing is normal albeit a bit unnerving. We only have to look back to the Greece crisis to see how uncertainty can make markets twitchy. The UK story is unfolding daily and the Americans are about to start a new chapter with their elections so one thing we do know is there's more change coming. This will likely mean more market volatility — but that doesn't always mean losses.
The biggest impact of Brexit will be on the UK economy — leading to slower growth — and to a lesser extent Europe's growth. The impact will be much smaller on the global economy.
So far we've seen UK shares and higher quality UK fixed income investments holding up better than expected. The biggest falls were in areas like bank shares, which we don't hold a lot of.
We prepared and went into the Brexit vote with fewer shares than normal and only a small exposure in UK shares (1.6%) with our portfolio focused on high quality companies. This combination has enabled shares in the portfolio to perform better than the market.
We know further change lies ahead, but we're well placed to take advantage for our clients where we can. We're keeping a close watch on the markets, economies and trends and are ready for opportunities as they arise.
If you're feeling unsettled about your investments the best thing to do is talk to us. We can help you ensure that your investment strategy is aligned with both your financial goals and tolerance for risk.