Following the EU referendum result economists, analysts and professional investors have been giving their views on stock markets, sterling, interest rates and inflation amongst other things. However, many investors will simply want to know what, if anything, they should do with their investments.
This question was put to Old Mutual Global Investors’ UK equity fund managers this week and their response was:
Short-term stock market volatility is expected in the wake of the ‘leave’ result, so don’t make any rushed decisions in response to falls in the value of your investments.
When you invest regularly over a period of stock market volatility you will benefit from lower prices in the months when markets have fallen. In these months your money will buy more units or shares, then when prices go back up again (presuming they do) you will benefit from the gains.
If your portfolio is made up of a diverse mix of assets it is far less likely that all your investments will go down in value at the same time.
When prices are fluctuating, at certain points some companies will seem under- or over-priced. This can be an opportunity to trade to take advantage of these anomalies. Unless you keep a very close eye on the markets, a professional fund manager is likely to be best placed to take these decisions.
The main thing an investor can do to ensure they are in the best possible position to work through the expected volatility is therefore to make sure their portfolio is diversified and invested with well-rated active fund managers. For personalised advice on your portfolio, please contact Richard Higgs, Chartered Financial Planner, on 0117 966 5699 or email@example.com.