Our views

Brexit - credit comment


Eric Holt, Head of Credit

24 June 2016

Markets have been volatile this morning as the UK woke to the challenges of economic and political uncertainty. Gilt yields have fallen significantly and the relative prices of corporate bonds have dropped, while equity markets have tumbled and financials have borne the brunt of turbulence.

Trading volumes have been relatively light. While re-pricing has been significant, we are not experiencing indiscriminate asset sales and we are taking advantage of opportunities to purchase securities at depressed valuations. We believe our portfolios are positioned for outperformance over the medium term, and are supported by a foundation of structured and secured assets that provide a balance between risk and return. We are not making reactionary decisions and our fundamental positioning and outlook have not changed, and we will assess the events of the next days and weeks and their impact upon our portfolios thoroughly.

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. Unlike the income from a single fixed income security, the level of income (yield) from a fund is not fixed and may go up and down. For funds that use derivatives, their use may be beneficial, however, they also involve specific risks. Derivatives may alter the economic exposure of a fund over time, causing it to deviate from the performance of the broader market.