A comment on the Brexit decision
We wake up today to the extraordinary news that Britons have voted to leave the European Union. The immediate question is what the implications are for financial markets and for our funds.
First, although we did not discount the possibility of this outcome, nor did we think it the more likely. We believed that although the polls were close, undecided voters would tend to vote to remain. We were wrong.
Our funds are multi-asset funds so have some natural defensiveness built in via exposure to fixed income investments and what we call specialist assets, some of which are denominated in foreign currencies that will be rising today against a sharply falling pound. But within our multi asset framework we are still exposed to investments, principally equities, which will fall sharply today.
We have always communicated the message that we are long-term investors so our hope, and indeed our expectation, is that our investors will remain calm. As the saying goes, if you are going to panic, panic first. We certainly think it unwise to join any stampede and indeed at some point would like to take advantage of the lower prices.
Right now it is unclear how far and for how long markets will fall though it is quite possible that markets today will end the day well off their lows. Markets have a tendency to overreact. We will be watching very closely but remaining calm.
Further out, it will be the implications of voting to leave the EU for the UK economy that will continue to occupy our thoughts. It was patently clear from the debate that even those campaigning to leave the EU did not know precisely what a post-Brexit world would look like. The financial markets are sending a clear message today that it could well be bleak, though that is by no means a certainty. Indeed 52% of the electorate believes that the UK’s prospects are now brighter. They and their flag bearers should now be listened to.
The information in this document is as at 24.06.2016 unless otherwise stated. The value of investments and any income may fluctuate and investors may not get back the full amount invested. The views expressed are those of Peter Elston at the time of writing and are subject to change without notice. They are not necessarily the views of Seneca and do not constitute investment advice. Whilst Seneca has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.
Before investing in the LF Seneca Funds you should read the key investor information document (KIID) as it contains important information regarding the fund, including charges, tax and fund specific risk warnings and will form the basis of any investment.
The prospectus, KIID and application forms are available from Link Fund Solutions, the Authorised Corporate Director of the Fund (0845 608 1497). Seneca Investment Managers Limited, the Investment Manager of the Fund (0151 906 2450) is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at Tenth Floor, Horton House, Exchange Flags, Liverpool, L2 3YL. FP16/107