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24 Jun 2016

BREXIT

The Brexit vote to leave the European Union is a clear vote against the political establishment. The UK’s withdrawal process will not be simple, uncontentious nor immediate. However, under the bloc’s governing treaty, it must be completed within two years. Meanwhile, capital markets are set for renewed and potentially brutal volatility, as traders take positions deemed most favoured by the referendum’s outcome.

Monetary and fiscal policy in the UK and EU is expected to remain highly accommodative to limit the economic fallout, with interest rates staying low or declining further.

Foord's local and international portfolios will not be immune from the near-term downside volatility, despite the emphasis on quality businesses and conservative portfolio construction. However, longer term, the Brexit vote will have very little effect on the forward earnings of the businesses in our portfolios.

Volatile markets are the ideal time to accumulate quality businesses and position portfolios for the next up-cycle. All of Foord's portfolios have relatively significant cash holdings, which may now be judiciously applied to accumulate quality businesses at lower prices, a scenario for which we have waited patiently.

Investors should take special care not to react imprudently by selling into declining markets.

Insights

14 Apr 2021

Markets in a nutshell — March 2021

Global equities rose in March on expectations for accelerating global growth following vaccine rollouts, further stimulus measures and ongoing accommodative monetary policy. Developed market equities outperformed…

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12 Apr 2021

Finding Inflation-beating Returns

Portfolio manager Brian Arcese, reflects on the anniversary of the pandemic-driven sell-off and how investors can find inflation-beating opportunities in the markets.

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