UK votes Leave. What next?
As a company, we remain entirely neutral in a political sense.
Our directors and employees each have their own views about the result of this referendum, but as a company we have a cohesive house view.
It is no secret that investment markets dislike uncertainty.
Already this year we have witnessed a reasonably high level of market volatility, due to a variety of factors including an economic slowdown in China, rising interest rates in the US and the broader outlook for commodity prices.
Put simply, market movements have not (and will not) be solely attributed to the prospect of ‘Brexit’.
Periods of investment market uncertainty such as this reaffirm the importance of holding a well diversified portfolio, tailored to the individual’s circumstances and personal risk tolerance.
From this perspective, we remain confident that our clients’ investments are well positioned to ride out any market turbulence, despite what is likely to be a short-term period of volatility.
We remain focussed on the long term outlook for the investments held on your behalf; you invest money rather than speculate.
Accordingly, it would be inappropriate to trade around the market volatility.
That said, a knee-jerk precipitous fall in all UK markets might provide an attractive opportunity to increase the general level of risk in investment portfolios.
We expect the Leave vote to prompt a period of political uncertainty, and this is also likely to unsettle markets, adding to volatility levels.
It will take several years to negotiate the departure settlement with the EU.
We hope that the more alarmist commentators will swiftly moderate their position and the process will be relatively smooth.
History suggests that a second round of reform proposals and a second referendum are also a distinct possibility.
Looking through the short term volatility to long term investment implications, the impact on UK interest rates, the level of sterling and the broader economy remains unknown.
There is a range of scenarios that could materialise, each of which would generate winners and losers.
As these scenarios take shape, we will seek to identify long term investment opportunities and help our clients stay focused on long-term outcomes, rather than reacting unnecessarily to short-term volatility.