During the last 12 months stock markets have been volatile. There have been a number of events for investors to ponder, most recently the historic decision taken by UK voters to leave the European Union.
Our sense is that the initial shock of this result has already subsided. However, negotiations will continue and we can expect a period of economic uncertainty which could result in volatile asset prices, particularly in UK and European equities.
Before the referendum we spent a lot of time with our panel fund managers in order to understand the actions they would take in the event of either result. We were comforted by the robust contingency plans that they had in place and the steps they had already taken to mitigate the potential fall-out. As at 26th August 2016, all but one of the funds on our panel have produced positive returns since the EU referendum, which is an excellent result.
The only fund on our panel that has dropped in value since the referendum is F&C UK Property. Commercial property fund managers have the ability to adjust the price in which investors can sell units from the fund. F&C acted quickly after the vote to reduce the unit price. This measure was taken to protect existing investors from large outflows from the fund. F&C have already taken steps to reverse this change and expect the value to recover close to the pre-Brexit level soon.
Our client portfolios are always well diversified into various asset classes and geographical areas which gives an additional safeguard. This is a prudent approach for all market conditions, but particularly at times of higher market volatility.
In summary, our investment process puts our clients in a strong long-term position despite the current uncertainty.
Please note that past performance is no guarantee of future returns and the value of your investments can fall as well as rise.
Registered in Scotland, Company Number: SC288945
Mearns & Company are authorised and regulated by the Financial Conduct Authority