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Brexit Portfolio Comment

How are we thinking about portfolio positioning and Brexit?

Discretionary portfolios are naturally tailored to the individual circumstances of each of our clients. However, we do have a broad house view about the market implications for Brexit which is generally reflected across portfolios.

We have low overall exposure to the domestic UK economy, partly because quoted companies have significant overseas operations and partly because we have deliberately tilted our equity allocation to international markets. Whatever the outcome of the parliamentary vote on 11 December  there will remain for some time significant uncertainty around the path of future EU-UK relations, particularly when it comes to the trading relationship and issues around the Irish border.

Internationally focused UK companies, with earnings denominated in a currency like US dollars, can expect to benefit from a weaker pound. Their overseas revenue exposure effectively gives them some protection against a bad Brexit deal.

Some portfolios may also have an allocation to US Treasuries, as well as a small allocation to gold. US Treasuries are naturally defensive assets and provide a source of non-sterling denominated cash for investment. Our gold exposure helps to diversify our defensive allocation, and we saw gold perform well during the recent market volatility in October.

If you have any specific questions about your portfolio, I would recommend that you contact your Investment Manager, who will be able to go into more detail about the specific investments you hold.

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