Trustnet Magazine Issue 48 FEBRUARY 2019 | Page 24

Your portfolio
While many investors continue to worry about
the impact of Brexit on their portfolio, Anthony
Luzio says there are much bigger threats they
should be concerning themselves with
Further sterling
weakness should boost
UK investors’ portfolios
in the case of a “hard
Brexit”, meaning there is
little reason to panic
Project Fear
E
[ THREATS ]
24 / 25
ver since that day in June
2016, there has been an
endless stream of fund
managers repeating the same
thing: because the FTSE derives most of
its profits from abroad, further sterling
weakness should boost UK investors’
portfolios in the case of a “hard Brexit”,
meaning there is little reason to panic.
However, the message doesn’t seem
to be getting through. The most recent
Schroders Global Adviser Survey
found Brexit to be a continuing source
of worry for investors, with 46 per
cent of respondents naming it as the
number-one concern among clients.
This is not to say investors have
nothing to worry about – quite the
opposite, in fact. Here a selection of
fund managers reveal five risks that
pose a bigger threat to your portfolio
than Brexit.
No/soft Brexit
Sterling was one of
the earliest casualties
of Brexit, falling 6 per
cent the day after the
referendum. While this
was bad news for Brits
abroad and importers,
it aided most investors
by boosting the value of
foreign earnings.
However, John
Ricciardi, chief
executive officer of
Kestrel Investment
FE TRUSTNET
Partners, warns this
could easily swing back
the other way.
“Funnily enough, one
of the big losses for UK
investors is a solution
to the current political
impasse,” he says,
adding that with the
UK accounting for just
5 per cent of an average
global equities portfolio,
returns are “mightily
dependent” on sterling.
“So, if the pound
were just to go up to
where it was pre-Brexit,
assuming nothing else
happened, you’d be
looking at around a 14
per cent loss just from
the currency moves in
your equities portfolio,”
he continues.
“The first and foremost
risk for UK investors is
that we end up with a
very strong pound rally.”
trustnet.com