Old Mutual’s Richard Buxton said he is far more worried about the impact on global markets of the upcoming US presidential election, than the June referendum on whether Britain leaves the EU.
Speaking during a Morningstar investment conference today (10 May), the veteran fund manager and chief executive of Old Mutual Global Investors said he has “no doubt” Hilary Clinton will become the next US president.
But he still forecast bouts of fear from the public she might lose to impact global stocks.
Financial markets will “really begin to panic” in the run-up to the US election in November, he predicted, as the possibility Republican front runner Donald Trump could win begins to be taken more seriously.
Mr Buxton said, unlike the last 40 years in the UK, there is currently no one representing “middle America” politically, which he said makes the US election “very dangerous” and “unpredictable”.
“I am absolutely convinced we will not vote to leave.”The manager of the £2.3bn Old Mutual UK Alpha also said he is “confident” the UK will not vote for Brexit, because British voters are “inherently conservative” and do not want radical change unless the country is in “absolute crisis”.
“There is no such sense of the UK being in a crisis, so the leap into the complete unknown relative to the certainty of ‘better the devil you know’, means I am absolutely convinced we will not vote to leave.”
When asked how he thinks markets will react after the vote, Mr Buxton said there will be a sigh of relief if the UK votes ‘no’, and outflows in the UK equity sector might start to turnaround.
“Hopefully people will start to recognise there are good things going on among UK companies,” he said, adding he expects more British companies to come to market after the EU referendum.
“Once the referendum is out the way, people will start to focus back on the fundamentals,” he said, adding there are some “really interesting” investment opportunities available in the UK.
Buxton’s UK Alpha fund is down 14.7 per cent over the last year, versus its Investment Association UK All Companies benchmark, which is down 6.4 per cent.
According to data from the IA, equity funds have seen outflows continually since the start of the year, reporting a fall of £459m in March, a £196m slide in February, and a fall of £68m in January.
Dan Farrow, director of SBN Wealth Management, agreed the US elections are a consideration, but disputed whether it was a major issue for advisers to worry about.
“The presidential position is actually more a figurehead than a law and decision maker. If I were Richard I’d be more worried about a Western world slowdown and the impact a withdrawal of QE could be having.”
However, Whitechurch Financial Consultants’ head of research Ben Willis said he shares Mr Buxton’s sentiment. “Markets hate uncertainty, and so whilst the EU referendum is going to garner lots more headlines until 23 June, the bookmakers are still saying that it is 2-1 on that Britain votes to stay in.
“However, the impact of the US on global financial markets is considerable and uncertainty over the next US president, which could be far closer than we imagine, could weigh on global markets in the run up to the US elections.”
katherine.denham@ft.com
