As you will be well aware the UK Referendum vote on whether to remain or leave the EU went in favour of Leave by a majority of 51.9% versus 48.1%. Â This result has come as a surprise to many and understandably it has caused some concern amongst investors.
In the run up to the referendum investment managers were trying to position portfolios to balance against both a vote to leave or remain. Whilst difficult this did result in a reduction in some equity holdings and an increase in Fixed Interest and Hedge fund assets.
Prior to the vote, it was predicted that sterling could fall by up to 15% against other currencies in the event of a vote to leave.Â In practice it fell initially by 8% and by mid-afternoon Friday it had recovered half of this loss.
This was also reflected in the FTSE 100 Index which was forecast to fall by as much as 20%.Â On Friday the market opened 8% lower, but again by mid-afternoon had regained much of the lost ground, and closed 3.2% lower. To put this into meaningful context the close on Friday was actually 2.35% higher than the close on the previous Friday.
The FTSE100 has opened slightly weaker this morning falling by 0.50% to 6108.
The strong advice from us is to do nothing unless you have to. It is likely that we will experience volatility and uncertainty in the near term, in these situations acting in haste is never advisable. Investors for the long term should hold on, portfolios are well diversified with a mixture of asset classes, if you are investing on a regular basis and drip feeding money into the market continue to do so and finally take advice from us before you take any action.
A couple of more practical points; the Financial Services Compensation Scheme (FSCS) currently set at Â£75,000 (due to an EU limit of E100,000) remains unchanged. Although this could now change in the future. The Bank of England base rate is still 0.50%, although predictions are that we could see a cut to 0.25% as early as August.
The investment managers we work with have a strong track record of successfully adapting to changing markets and are experienced investment specialists. The only near certainty, in our view, is that overall volatility in the markets will remain, so we must get used to that. Â The investment managers are quite rightly pointing to the fact that we are invested for the long term. Â Therefore, our message is that we need to sit tight over the coming weeks and months as matters unfold.
We want to provide advice, continuity and peace of mind at all times, we will follow developments closely and where appropriate will provide further up dates.