Our views

Absolute Return and Brexit impact

Darren Bustin, Head of Derivatives

24 June 2016

Market yields have fallen sharply this morning and curves have steepened, while breakeven (implied) inflation rates have fallen by a lesser amount. While our portfolios were predominantly positioned for a ‘Remain’ outcome, we had a number of offsetting positions that were set to benefit in the event of a ‘Leave’ decision. Our short duration (interest rate sensitivity) positioning will have been a detractor from performance, but we expect our long breakeven positioning to offset some of this in the medium term.

We are taking selective opportunities during this market volatility, but we are not making rushed decisions or altering our core positions at this stage. While remaining alert to immediate risks and opportunities, we are waiting for more clarity to emerge on both the economic and political situation in the UK and abroad, in order to evaluate our portfolios.  

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.