This is a historic moment but not a time for historic investor concern. Although heightened concern will exist for investors worldwide, we view this time as a buying opportunity within stocks globally.United Kingdom (U.K.) voters won the vote by a margin of 52/48% to leave the European Union (EU), and the U.K. will now enter a two-year negotiation (at least) with the EU on how the exit will be handled. The vote was triggered in large part to immigration concerns by Britons and also signals a lack of congruent globalization efforts by the U.K.
As always, we are here to answer any questions you have about your investments and what is happening in the financial world. Please call with any questions or concerns.
How are We Invested
The British Pound (aka “Sterling”) has seen its biggest one-day drop since 1971 – down more than 11% against the U.S. Dollar. However TTC’s global bond allocation holds no currency exposure to the Pound, while the benchmark holds more than 6%. Our global bond allocation has no exposure in U.K.-based debt (bonds), and the global bond index holds more than 6%.
Related to international equity, TTC’s stock model has less than 4% allocated to U.K.-based companies, companies which are poised to benefit from Brexit in many cases.
We feel the increased risk associated to the Brexit will remain for a while. The economic system as a whole is not at risk, but the instability associated with Brexit and the possible political fallout in other countries of the European Union will add some uncertainty and instability in the region’s economy.
The Trust Company, our investment committee, and our financial consultants have been in the process of assessing global stock and bond exposure and will continue to do so. To date, we have chosen to maintain the allocation we hold in international equity and fixed income allocations and will make the appropriate investment repositioning if we feel an allocation change is necessary.