Deal or No Deal – What’s our Investment Strategy?
With events moving almost hourly and Brexit continuing to dominate the headlines, it’s reasonable to assume that it might cause anxiety for some investors.
Who could have predicted following the EU referendum result in 2016 how long it would take the UK to leave the EU?
So far, so good?
Despite much political wrangling, negotiations have so far caused relatively modest market volatility. In fact, many UK stocks have continued to make gains, albeit with the occasional blip. True the FTSE 100 index of Britain’s biggest companies has certainly looked shaky at times, with market prices reacting to various noises emerging during the Brexit process. Yet, generally-speaking, the UK stock market has remained resilient, despite a far from certain outlook.
No doubt Brexit will continue to test nerves and indeed you might wonder if Ovation are positioning portfolios accordingly. In short, we have not changed our approach at all. That is not the way we run money.
We believe in identifying the appropriate asset allocation to suit your goals, then sticking with it, while also tuning out short-term noise. Ovations portfolios are built to reflect this belief. Regular re-balancing ensures they remain on track and within your appetite for risk.
Focusing on the long-term and the reasons you invested in the first place, is another way to prevent any knee-jerk reactions when markets are uncertain.
Put into perspective, the UK economy plays a small role in global investing. We take a broad and diversified approach by investing in a range of different asset classes and geographical areas, the highs and lows of Brexit should hopefully have limited impact. After all, companies solely focused on the UK ideally only make up a proportion of a diversified mix of investments.
Are we concerned about deal or no deal?
From an investment perspective, not really. So without being complacent we believe that should markets become more volatile due to Brexit, our long-term asset allocation approach will prove even more valuable, by mitigating risk and exploiting opportunities as they arise.
The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.