As I’m sure you’ll know, today we woke up to the news that the UK has voted to leave the European Union.
In the final hours of the voting, financial markets had moved to price in a 90%+ probability of a vote to Remain.
My team and I have been working hard over the past few weeks to position customer portfolios for a range of outcomes. Indeed, a week ago we made some changes as we felt the risk of a Brexit had been underappreciated.
We took steps to protect Nutmeg portfolios by selling Japanese and European equities and corporate bonds, raising cash levels and adding more to defensive holdings like government bonds and gold. We expect those to do particularly well today and in the next few weeks. Given the extreme weakness of the pound, holdings in US equities have actually risen in value, which may provide a buffer to our higher risk portfolios.
Whilst it is unsettling to see impacts to the value of your investments, we urge everyone to remember that investing is for the long-term. History shows us that drops in the markets tend to be short-term, and that markets do rebound, as we have seen markets recover after all of the previous market downturns.
At the moment it’s too early to tell how long that rebound may take but, as always, we will be actively managing portfolios and sending out regular updates.
Here at Nutmeg, we do allow customers to withdraw whenever they like, but choosing to do so will mean that any losses will be crystallised and you won’t see the benefit of any rebound as you will have sold your holding. Our guidance, as always, is to think long-term and wait it out.
When seeing falls in the FTSE index today, it’s important to remember that owning a globally diversified portfolio across a wide range of markets and assets is key to balance the risks in situations just like this.
We expect that, over the coming days and weeks, there will be opportunities that open up in these markets, and we’ll keep you informed about any changes we make.
As always, our team is here to answer any questions you may have. We do expect our customer support centre to be very busy, so please bear with us on this unprecedented day.
Risk warning:
As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future performance.
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Shaun Port
Shaun is the chief investment officer at Nutmeg. He has over 25 years’ experience developing and implementing investment strategies for clients ranging from central banks to pension schemes to charities and private individuals. Shaun holds a degree in Mathematical Economics from the University of Birmingham and is a Chartered Alternative Investment Analyst. He can be found tweeting @ShaunPort.Other posts by Shaun Port
