Mexit? Monexit? Money exiting due to Brexit

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With the UK less than two weeks away from a general election where Brexit dominates, it’s no surprise that its impact is that all investors can think about. According to the Schroders 2019 Annual UK Financial Adviser Survey, Brexit is the single biggest concern of those investing, with 94% raising it in conversation with their investors.

‘As we saw in the 2018 survey, the uncertainty of Brexit remains a prevailing concern for advisers,’ said Philip Middleton, Head of UK Intermediary, Schroders.

Since the referendum, 40% of clients have diversified their investments away from the UK with 74% choosing to invest in the US instead. These choices are the same as recorded in the 2018 survey. But demand for European investment has fallen with only 22% of advisers reporting increased asset allocation in 2019, versus 52% in 2018 and 50% on 2017.

Brexit pragmatism

In the event of a win by the Conservative Party and the passing of Boris Johnson’s proposed Brexit plan, 25% of advisers said that they would make substantial tactical changes to their portfolios. That rises to 35% in the event of a no-deal Brexit.

Brexit may cause money to exit from the UK, but advisers are nonetheless bullish about the equities market, expecting to reduce exposure to government and corporate bonds over the next year, and 41% expecting to increase their allocation to the UK equities market, 34% to emerging markets and 32% to alternatives.

Philip Middleton found this news ‘cautiously optimistic’ for the UK. ‘Whilst 40% of investors have moved out of UK assets, capital looks set to be deployed back into UK equities with 41% of advisers expecting to increase allocations in the next 12 months.’


Photo by Chris Lawton on Unsplash