UBS: Five investment lessons from Brexit

Although opinion is divided on the significance of Brexit, we believe there are key insights that investors can glean from the UK referendum.

About a month has passed since the UK’s vote to leave the EU, and muchhas been written on the subject. Is Brexit important for markets? Aftertalking to investors around the world, I can tell you that opinions continue tovary on the significance of the UK’s decision. In the US, for example, manythink that this is just politics, and has little to do with markets. Yet, I believewe can learn from Brexit, and in this letter I outline five key lessons forinvestors.

1) It is not going to get easier to forecast political outcomes over the next 12 months.

2) “The future” matters today as globalization and technology havemajor consequences.

3) Investors in developed markets cannot afford to ignore currency volatility. 

4) Diversification is becoming even more important to combat priceswings.

5) Longer term, central bank policy and economics still trump politicalrisk.

These lessons are at the heart of both our long-term strategic and our shortterm tactical asset allocations. We have made three changes to our tactical asset allocation this month. We are increasing our overweight in US equities versus high grade bonds, introducing an overweight in emerging market equities versus Swiss equities, and taking profits on our successful overweight on euro-denominated high yield bonds.

Der vollständige Beitrag als pdf-Dokument

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