On the eve of the long-anticipated vote on the 23 June, advisers have said they will not tinker with clients’ portfolios in order to benefit from a certain position, because the outcome of the referendum and subsequent consequences are so uncertain.
Danny Cox, chartered financial planner and head of advice at Hargreaves Lansdown, said those who try to position a portfolio are more likely to get it wrong than right.
“Anyone taking risk off the table will dilute the benefit of bounces and rallies when they happen,” he told FTAdviser. “Arguably, if you were going to adjust asset allocation, you are several weeks too late.”
Mr Cox said the best way to navigate through “short-term storms” is for investors to have a balanced portfolio with a wide range of exposure.
Alex Reynolds, a financial adviser with London-based Advies Private Clients, said the numbers forecasting what would happen if the UK stays or goes are “pie in the sky”, adding it is a bad idea to make tactical decisions on clients’ portfolios.
“There will clearly be a lot to deal with if the UK exits, but I believe that any losses will only be short-term.”
“I am not in the business of fortune telling.” Simon TorrySimon Torry, a Chartered financial planner with Essex-based SRC Wealth Management, echoed this, adding UK companies might fair better in the long-term if the UK exits.
He said the departure could destabilise European markets, which in turn may deter investors from the EU and see them divert funds to the UK.
“Given the result could go either way, I have taken the decision not to attempt to second guess the market and have left client portfolios unchanged; I am not in the business of fortune telling.
“We do however, have a number of clients ready to invest, and have advised them that delaying the process until after the referendum makes sense.”
Jason Hollands, managing director of communications for Tilney Bestinvest, said their client portfolios have been tweaked slightly in favour of larger UK companies over small and mid caps.
He has also steered away from sterling currency hedged versions of European and Japanese equity funds.
“Other than that, we’re not specifically trying to position portfolios around an expect outcome in the referendum itself, which is simply too close to call,” stated Mr Hollands. “While a further depreciation in sterling would be likely in the event of a leave vote, the impact on UK equities - beyond a knee jerk reaction - is far less clear.”
Tilney Bestinvest’s client portfolios have been cautiously positioned towards risk assets for some time, for a wider set of reasons than Brexit, as there is too much liquidity trapped in the financial system after years of unconventional monetary policy.
Anthony Rayner, manager of Miton Capital’s multi-asset fund range, said he “avoids taking active positions on opaque risks”.
“In essence, the EU referendum is a binary, single day risk event and not one for us to get involved in,” he said.
As a consequence, Mr Rayner said he is not implementing return-based views, but is managing risk in a slightly different way, such as reducing currency risk by hedging back more overseas exposure into sterling.
katherine.denham@ft.com
