In our view the decision for the UK to leave the European Union (EU) will increase market volatility over the months ahead and we will now face a period of uncertainty until the exact terms of Britain’s exit (Brexit) are negotiated.
Financial markets dislike uncertainty. This has been demonstrated by the market reaction across all asset classes, UK and European markets opened the morning after the result with falls of between 5% and 8%. We are likely to see continued volatility over the short term.
We believe that over the longer term the UK and World economies will not be significantly influenced by the decision. Nonetheless in the near term UK growth is likely to be lower over the next 18 months or so than if we had voted to remain. Our portfolios are designed for a challenging world with low growth, weak productivity, debt and deflation problems. By investing in a diversified portfolio across different asset classes, we aim to minimise the volatility which markets are currently experiencing.
Although the current market conditions are unsettling, we would urge clients to look through this period of uncertainty, focus on the longer term and the short term opportunities this may provide.
Currently we do not propose any changes to your portfolio which is aimed to achieve growth over the longer term.