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The End of the World is Nigh….Well Not Quite

We are now into our third trading day since the seismic shock of the Brexit vote, and probably the biggest surprise is the enormous political vacuum our politicians have left us after the vote.

In my last missive, written before the markets opened on Friday, the talk was of 8% falls in the UK stock market along with falls elsewhere, and a devaluation of the pound. As I mentioned, gilt markets should continue to do well and any funds with a gold exposure would do well. So how has it all panned out so far, as all I hear on the news are words like ‘catastrophe’, ‘shocking falls’ etc, when talking about the pound and the FTSE 100 Index.

The FTSE 100 initially fell 6% but climbed during Friday and ended up -3% down. A further      -3% fall on Monday has been followed by a 2% + rise today. Not that we are out of the woods by any means.

Below are a series of charts that look at the various sectors or specific funds over the first couple of days, when we would normally see the most volatility. A lot of our clients will have some of these funds in their portfolios.

Chart 1 – shows M&G Gilt and Fixed Interest along with two emerging market debt funds which shows the effects of the falling pound short term

Chart 2 – Our two favourite UK funds, Invesco High Income and Woodford UK Equity Income have fallen by -4% and -6%.

Chart 3 – Two global equity funds, Fundsmith Equity and First State Global Listed Infrastructure, which again shows the benefit of a falling £.

Chart 4 – Two absolute return funds, SLI GARS and Henderson UK Absolute Return, with small losses over the two days trading

Finally Chart 5 shows the Troy Asset  Management Trojan Fund and Invested Cautious Managed and they both have a sizeable allocation to gold, and the gold price has shot up recently.


So, don’t get to despondent with the wonderful BBC making out its all doom and gloom at the moment as its not as bad as everyone thought it would be and opportunities will present themselves in the near future.

If interest rates come down which many people predict then this will benefit fixed interest funds, so, again, having a balance of different asset classes, over the longer term will always reduce the volatility of your portfolios.

We will continue to monitor the markets and keep you informed as much as possible.

Always keep an eye on our website for news at www.mpafm.co.uk

Many thanks

Phil J McGovern FPFS, Managing Director

Chartered Financial Planner

This is a general newsletter and cannot be construed as individual advice. Please speak to your qualified adviser before making any investment decisions and the value of your investments can fall as well as rise in line with market conditions.

 

 

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