Nobody can say that this summer has not been eventful so far. A new Conservative Prime Minister Boris Johnson, negative UK economic data and the countdown to Brexit on October 31.
Bearing all these three factors in mind, is it time for UK investors to review their portfolio, why wait for a spring clean? Interactive investor’s head of personal finance Moira O’Neill says summer is often a good time to take a step back and reassess your holdings.
“Many investors – whatever their political shade – will be feeling less sunny about the political state of the UK. It may be that Brexit uncertainty has already been priced into the market – or you may feel that the coming months could herald even worse news for UK stocks.
“So, look at your exposure – do you have too much in the UK? Or, having ridden a wave of US tech gains, supercharged by a strong dollar and a weak pound, is now a good time to think about repatriation? Spending some time looking at whether you are over-exposed to your home market or if you want to make other changes given the current political and economic situation could well be worth it.
The Architas view
Jaime Arguello, chief investment officer (CIO) at multi-manager Architas believes investors should take a slightly more cautious view: “With markets making encouraging gains so far this year, we are wary of potential bumps in the road in the months to come, as we saw in late 2018. We therefore believe that taking a slightly more cautious view is sensible, while remaining diversified across a broad range of asset classes.”
“Income seekers in particular may need to check exposure. UK companies have been among the world’s most reliable and generous dividend payers historically. However, high dividends can also be a sign of imminent danger, as holders of Centrica will know to their cost. Global dividends are becoming more attractive and by investing in global income funds that target dividend-paying companies from overseas, UK investors can diversify their income sources, thereby reducing risk.”
“It’s important for all types of investors to have a broad global spread. Even if you have a few so-called ‘global’ funds, it’s worth looking at the underlying holdings because you might find that you have more UK exposure than you bargained for.
“Diversifying your portfolio away from UK equities by including overseas markets and different asset classes such as commercial property and bonds is a sensible investment strategy that lowers your risk and can lead to less bumpier returns over the long term. And the easy way to do this is by using quality funds, investment trusts or exchange traded funds (ETFs).”