View more on these topics

John Chatfeild-Roberts: The folly of building an investment case around Brexit


The EU referendum starting gun was officially fired last month, with David Cameron announcing 23 June as the date of the vote. To remain in a “reformed EU” is now official Government policy, while the baton to lead the “leave” campaign has been picked up firmly by Michael Gove, Chris Grayling and, of course, the mercurial Boris Johnson.

The political bricks immediately started flying. Sterling weakened and is at its lowest level against the US dollar since 2009, while rating agency Moody’s said the UK’s credit rating was at risk.

All this happened within 72 hours of the referendum date being announced – and we still have another three months to go before the vote. Until then we will be subjected to facts, counter-facts, information and misinformation, impassioned pleas, political and emotional rhetoric and scaremongering.

Little will be balanced, much will partisan; the polls are unreliable predictors of the result. Building an investment case purely around Brexit, given the uncertain outcome, is unwise. Investors should continue to invest in a diversified portfolio of high quality assets and adjust their risk as the outcome becomes clearer.

Meanwhile, just three months on from the December interest rate rise in the US there seems to be an accelerating acceptance developed world economies should have rates close to zero, or even negative.

Indeed, even the Federal Reserve, which recently scaled back its guidance on rate rises for this year, has told US banks undergoing their annual “stress test” of financial resilience to model the sensitivity to negative rates. This is not to say negative rates will happen in the US but the fact it is being contemplated and modelled under instruction from the central bank in the possible event of a US recession is in itself highly revealing. This for the world’s largest economy, which is still growing at a rate of 2.5 per cent.

So if the prospects for rates to substantially rise further over the course of this year seem diminished it is largely down to three factors, all of which are inter-linked. These are the recent behaviour of world markets, continuing anxiety over the deflationary effects of weak commodity prices (oil especially) and the slowing rate of global economic expansion.

Despite this general outlook, the oil price does seem to have stabilised, at least for the time being. At the time of writing, Brent crude is $40 per barrel, up from a low of $28 in January. Following the impasse among producing nations, including within Opec itself, about how to deal effectively with the 75 per cent fall in the oil price from its peak, the industry’s tectonic plates have been gradually shifting.

In February, Russia, Saudi Arabia and Venezuela met in Qatar in a closed meeting. While the outcome was limited to agreeing merely to maintain output at the January levels, the very fact of being in the same room and reaching some kind of agreement was significant.

Relations between Russia and Iran, not exactly bosom buddies over the last 35 years, have been thawing of late. They are cooperating militarily in Syria and Russia has extended a $5bn loan to Iran to develop its nuclear energy programme. However, there is absolutely no love lost between Saudi Arabia and Iran on virtually any level (they are, after all, on opposing sides in the civil war being fought in the Yemen). For Saudi to negotiate with Russia, a country moderately friendly to Saudi’s enemy, should not be lost on us.

John Chatfeild-Roberts is head of strategy for the Jupiter Independent Funds Team


Why advisers trump robots on plugging pensions advice gap

People – not robots – are the answer to Britain’s emerging retirement advice “vacuum”, as firms learn how to outsource their investment processes and delegate research to paraplanners. That was the conclusion of panellists at Money Marketing’s recent roundtable on retirement advice. Servicing less profitable, lower-net worth-clients is one of the biggest problems facing the […]


Phoenix to waive pension charges for a year

Closed-book firm Phoenix Life is to waive ongoing charges for around 50,000 pension customers after its independent governance committee raised concerns over value for money. However, the IGC has decided not to tackle exit penalties this year while the FCA consults on the issue, and notes only 15 per cent of customers have policies that […]

Creating opportunity out of change

By Denise Wond, marketing manager The buy-to-let market has recently been the subject of a raft of tax changes, all of which make it a less profitable and less appealing proposition for investors. In response, we’ve seen a dip in demand for BTL mortgages and that’s bad news for many advisers who will now be looking […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm