Based on the forecast returns of the model, EValue has reviewed all its risk rated asset allocations in response to the significant impact Brexit has had on the relative attractiveness of major UK asset classes – equities, bonds and commercial property.
Prospective returns on UK commercial property have been a casualty of Brexit. Commercial property valuations take time to adjust but the Insight model forecasts that they are likely to be negatively affected by the predicted slowdown in the UK economy. Accordingly, allocations to commercial property are significantly reduced.
EValue routinely updates its asset allocations each quarter but will be issuing an “out of schedule” investment commentary for clients and IFA users on Tuesday June 28th 2016. The previously scheduled 1st July update will be accelerated to be available for implementation in the first week of July based on 1st July market conditions when the initial shock waves have started to dissipate and longer term market expectations are clearer.
Bruce Moss, Strategy Director of EValue, comments: “Based on the impact Brexit has had on financial markets, in the immediate aftermath of the referendum advisers should be making changes to their strategic asset allocation benchmarks. However, the reallocation of client investments to new benchmarks should be made progressively over time to minimise costs and risk”
“Because investors have a preference for assets in their home country, our asset allocations have had constraints on the amounts that can be invested in overseas markets. As a result of the negative effect the vote to leave the EU has had on prospective UK asset returns, we are relaxing these constraints, so that investors following our risk rated asset allocations can benefit from the potentially higher returns in overseas markets – particularly developed country equity markets such as the US.”
If you would like more information on how EValue, as a leading financial technology provider, may be able to support your business, contact us today.
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