27 Jun The EU Referendum
The UK referendum on EU membership is over and the result is now known. The campaign itself was bitterly fought and reasoned argument frequently gave way to emotion and passion on both sides.
During the past few days, that emotion and passion has increased, heavily fuelled by the media.
On Friday the pound fell heavily against other currencies and by mid morning, the UK FTSE100 Index was down 8.7%. The index regained most of those losses and closed – 3.2% on the day and up 1.95% for the week.
Throughout the day spread betters and short term traders were winning and losing fortunes. Hedge fund manager Crispin Odey made approximately £220 million by betting on Brexit, however, many hedge funds suffered enormous losses that could prove fatal.
So, what does the Brexit result mean for clients of A&M Wealth Management Ltd?
First of all, none of our clients are short term investors and are definitely not gamblers! The investment strategies that we employ are long term and low risk.
During the next few months volatility will remain because investment markets don’t like uncertainty. The UK needs a new Prime Minister before the process of negotiating with the EU can begin and this will take several months. The process of withdrawing our EU membership will take several years.
At A&M Wealth Management Ltd we create bespoke investment portfolios utilising the best fund managers. Investment strategies are balanced between different asset classes and we prefer actively managed investment funds to directly owned assets ...This active management approach will prove beneficial in the months and years ahead.
It is worth noting that periods of uncertainty also create investment opportunities. The fall in sterling benefits our exporters as their products become cheaper and many British companies that have global operations benefit, for example, if overseas earnings are in dollars.
Shares in sectors such as banking, airlines and house builders are being discarded, which is driving prices down. This represents an excellent long term buying opportunity for astute fund managers.
At A&M Wealth Management Ltd we create bespoke investment portfolios utilising the best fund managers. Investment strategies are balanced between different asset classes and we prefer actively managed investment funds to directly owned assets. Fund managers hold dozens of different stocks and shares within their fund and can buy and sell as they deem appropriate. This helps to reduce investment risk and maximise growth potential. This active management approach will prove beneficial in the months and years ahead.
As far as the future is concerned for UK PLC, I regard the comments made by the German Chancellor Angela Merkel as the most sensible and reassuring. Backed by the German car manufacturers she has stated that the UK withdrawal should be conducted in a positive way that benefits the UK and the European Union. She recognises that as the second largest economy in Europe and the fifth largest economy in the world, the UK remains an important country with which to do business.
Regardless of the outcome of the referendum, good quality companies will continue to develop and innovate in ways that change our lives. Countries will continue to trade with one another as this creates prosperity and improves living standards.
The referendum has been a political rather than a financial contest and as the dust settles and the hysteria evaporates it will be business as usual across the world.