Election 2017: Investment insights

James Horniman, Partner, Portfolio Manager and Head of Professional Adviser Services
James Horniman, Partner and Portfolio Manager, James Hambro & Partners

James Horniman, Portfolio Manager

Once more the polls have produced a result few of us could have predicted. Markets don’t like uncertainty and there is a heap of it about now, yet the reaction was initially muted. While the “News at Ten” chimes were still ringing to the exit poll headlines, sterling fell away nearly 2% but UK equity markets opened the day steady.

The key investment lessons of the EU referendum and the US presidential election seem to have been learned. Shape portfolios to countenance a shock beforehand and do not panic afterwards when it happens.

Going into the election we were repeatedly questioning whether there was too much complacency in the markets. On the one hand, the management teams we meet continually fill us with confidence – demand in many areas appears buoyant and companies are investing. On the other, we see the cloud of Brexit and the dangers of a poor exit deal.

In such a context, we take some comfort from the fact that the majority of our portfolios are invested in holdings which are not reliant upon what happens in the UK to grow their revenues and profits. Indeed, we have ensured that even for our UK-listed companies and third-party funds, the longer-term opportunities increasingly lie abroad.

We have been neutrally positioned on equities and have constructed well-diversified portfolios, across geographies and asset classes, to better withstand any political risk pertaining to a single country.

As a result, we feel no need to instigate immediate portfolio changes. We will continue to monitor and refine – reviewing elements of portfolios that are more heavily dependent on the domestic market, favouring higher-yielding, UK-listed stocks with a strong international bias that might benefit from a weak sterling and that are resilient.

We will continue to monitor markets closely. The forecast is uncertain but the sky is not falling in.

Published 9 June 2017

You should not act on this content without taking professional advice. Opinions and views expressed are personal and subject to change. No representation or warranty, express or implied, is made of given by or on behalf of the Firm or its partners or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document, and no responsibility or liability is accepted for any such information or opinions.

The value of an investment and the income from it can go down as well as up and investors may not get back the amount invested. This may be partly the result of exchange rate fluctuations in investments which have an exposure to foreign currencies. Fluctuations in interest rates may affect the value of your investment. The levels of taxations and tax reliefs depend on individual circumstances and may change. You should be aware that past performance is no guarantee of future performance.

More from this author

Should you sell your buy-to-let property?

When Capital Gains Tax (CGT) receipts broke records last year many commentators blamed it on disenchanted buy-to-let landlords cashing in their profits. Many buy-to-let investors are asking their financial advisers…

Should we be worried by Brexit deadlock?

Brexit campaigners promised us a financial nirvana if we left the EU. The Remain camp painted a Dante-esque picture of Britain sinking into economic squalor. We find ourselves somewhere in…

Why markets rollercoaster

New research in the US, just published in the journal “Chaos”, has uncovered why investing in the markets can be a rollercoaster ride. A team of researchers at the American…

The spirits of Christmas

After a successful year for technology stocks, James Horniman has clearly been thinking too much about the fundamentals of stock selection. Maybe it was reading A Christmas Carol to the children before…

The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.

James Hambro Menu