Second Quarter 2016
As At 30th June 2016
Having thought that the first quarter was eventful, nothing quite prepared us for what we saw in the second. The vote to leave the European Union on 23 June was largely unexpected, and the ramifications for both financial markets and the real economy remain unclear.
The ensuing uncertainty has driven a sharp drop in the pound, and put commercial property and sectors exposed to the domestic economy under pressure. At the same time, the prospect of imported inflation has emerged. In the years to come, the UK will have to redefine its relationship with its European neighbours and the rest of the world.
In times of political instability and economic unease, we firmly believe that it is vital to retain consistent investment principles and a robust process.
However, this historic vote has reinforced our belief that trying to base investment decisions on the outcome of largely binary and opaque events (be they geopolitical or economic) is at best risky, and at worst reckless.
Instead, in times of political instability and economic unease, we firmly believe that it is vital to retain consistent investment principles and a robust process. Despite the events of the past few weeks, we at Adam & Company have not, and will not, change our approach towards managing your money – though, of course, we remain alert to any opportunities the turbulence brings.
We continue to believe in:
- High quality companies
Our team of portfolio managers use their collective experience to seek out companies that can allocate capital effectively and generate strong cash flows. We also look for management teams with a proven track record in navigating a cautious path in various market conditions.
We construct your portfolios to provide broad exposure across asset classes, geographies and sectors. This approach has shielded us from the sharp sell-off in banking and property stocks in recent weeks and ensures that we have access to international markets while the UK adjusts to the post-Brexit reality.
- Long-term horizon
At times like these the importance of adopting a long-term approach towards investing increases. We actively look to distance ourselves from the media hysteria and short-term market sentiment, and retain our belief that long-term shareholders in high quality companies will ultimately outperform those who try to time the markets.
Uncertainty and volatility are not new phenomena
Of course, we cannot predict with any degree of conviction what will happen in the months and years ahead, but a look to the past demonstrates that uncertainty and volatility are not new phenomena. We designed our investment process precisely for times like these. We are therefore confident that we are well positioned to ride out the current upheaval and emerge well placed to capitalise on the opportunities that will undoubtedly emerge in the post-Brexit world.
As ever, speak to your Portfolio Manager with any questions about your investments, and do refer to adambank.com for more insight.