At this stage, Wellian has said that it is difficult to predict a long term outlook, however, the only immediate certainty is the extreme volatility in the financial markets prompting huge price swings across equity, currency, bond and commodity markets. Such volatility will require continuing close management and careful analysis over the weeks ahead as Sterling falls to its lowest since 1985, the DFM has said.
As the pound reaches a 30 year low against the dollar, Richard Philbin, Chief Investment Officer of Wellian Investment Solutions (part of the Harwood Wealth Group plc) comments:
‘Whilst it is not our position to debate the rights and wrongs of this historic outcome, we are acutely aware of the fact that this verdict has raised many poignant and serious questions. Of these questions, the ones to have the most immediate impact on our industry include whether or not there will be an interest rate hike, will businesses turn away from the UK market and will the M&A market suffer even more than it already has done?’
Philbin continued:
‘The answers to all of these questions are at this stage, on this list of the many unknown outcomes of a Brexit. However, we would like to reassure our clients by reaffirming that we have recently been focussing all of our attention on diversifying our portfolios whilst simultaneously leaving plenty of room for wealth creation; regardless of the result.
“Furthermore, what is also reassuring is that the fall in Sterling will actually act as a diversifier. We have substantial international holdings in most of our portfolios and a 10% fall in Sterling will immediately boost their values by the same amount (excluding any movement in the underlying asset). Many of the UK’s best known companies are very international and a fall in Sterling will make their goods and services immediately more competitive overseas.
“We also need to remember that our Sterling based assets such as gilts, property and UK fixed interest won’t change in value to our Sterling based clients; neither will the income they are receiving from it.’
Philbin concluded:
‘Today and in the weeks ahead we will be spending lots of time thinking through the implications from an investment point of view. We acknowledge that this is not an issue that will be purely restricted to Europe; but one which will have a significant ripple effect across the global markets, which is why it is so crucial for us to continue to apply a long term view to our investment strategy.
“We wish to reiterate that investing; by its very nature, is rarely all plain sailing, even at the best of times and there will always be moments of risk and uncertainty like these. One only has to refer to the history books to see that we have often navigated through turbulent market risks and that in hindsight, these risks rarely seem as bad as they appeared at the time.
“The secret of our success in riding these storms has always been to design our portfolios with a long term view in mind and our diversification focused strategy has delivered excellent long term returns to our investors. We have been very aware of the implications of Brexit as well as the other investment risks such as the slowdown in the Chinese economy and the upcoming election in the US for quite some time. As such, our portfolios remain well diversified and invested with some of the City’s brightest minds to take advantage of opportunities as they unfold. As always, we will continue to keep our clients informed of our decisions as and when they arise.’
