Like the pollsters and bookies, we have been surprised by the referendum result. However, we have always been conscious of the possibilities and positioned ourselves accordingly for the longer-term.
Early market moves show some volatility across all asset classes (not least currency) and global regions. With the possibility of a ‘leave’ vote in mind, we have retained large positions in UK and global multi-national companies in our portfolios, as we believe the truly international nature of their businesses will offer some insulation from any uncertainty resulting from the referendum result. Our detailed approach to diversifying client portfolios across different asset classes should also provide some stability. In particular, overweight positions in international equities relative to UK equities, corporate credit, ‘direct’ property, and absolute return vehicles should prove less sensitive to short-term market movements. Meanwhile, within our stock selection, specific sector allocations (e.g. exposure to exporters and Dollar-denominated commodity-orientated stocks and regions) ought to help to protect our clients' portfolios. In the coming weeks, for example, we expect our exporting stock positions to benefit from currency movements, particularly thanks to the weakness in Sterling.
We continue to believe that government bonds look expensive (ever more so) on a medium/long-term basis. At current valuations, government bond positions look increasingly less compelling.
Market reactions can be emotional and therefore extreme in the very short run. This supports our long-term approach to investing client monies and, with all longer-term decisions, we strongly believe that calm, sensible consideration should be given. By taking a diversified approach over longer timeframes we have helped many of our clients to weather other extreme and rare events like the 2008 global financial crisis for example. It is time to see beyond the "white noise". Inevitably, the devil will be in the detail and, as ever, volatility creates exciting and interesting opportunities across a number of asset classes, regions and sectors. As we have always advocated, long-term objectives can only be met with long-term solutions. That cannot change.
As ever, should you have any queries or concerns, please do not hesitate to contact us. We would be very happy to discuss the recent developments with you.