And the above are just a few of the “known-unknowns” that UK voters have to ponder as they assess Brexit. Pity also the UK portfolio managers out there who have to tackle a slightly different question in order to position their portfolios appropriately: not whether the UK is better off in the EU, but whether UK voters will think they are better off in the EU.
Betfair currently has the chance of Brexit as 31% (29 Feb 2016) and the polls are undecided (YouGov at 37% each for remain and leave with 25% undecided) but you can be sure this will evolve and quite likely in an unpredictable way.
Add to that the fact it’s not always obvious which investment will perform best in the case of an in or out vote and the uncertainty inherent in building client portfolios is multiplied.
Fortunately, in the midst of all the debate and unpredictability surrounding the Brexit issue, the question of how to invest during a period of uncertainty is easily answered and never really changes: pragmatic diversification across asset classes, regions, sectors and styles.
It’s important to try to get to grips with narrow points like the direction of sterling, UK vs EU interest rates and which UK sectors are best positioned for possible Brexit, but we should never lose sight of the fact the world is an uncertain place and position for the unexpected by not having all our eggs in one basket.
Nic Spicer is portfolio manager for PortfolioMetrix
