It’s obvious to any observer that Brexit is the biggest challenge facing the UK in modern peacetime. We at The Motley Fool spend a colossal amount of time and energy warning of the severe economic consequences that prolonged uncertainty over European Union withdrawal is bringing, not to mention chewing the fat over the implications of a no-deal exit. That’s a particularly chilling scenario that could create a tidal wave of trouble stretching decades into the future.
It looks as if investors are becoming more and more concerned over Brexit and the impact it’ll have on their holdings too, as recent data from deVere Group shows.
The tension is rising
According to the financial advice specialist, more than 21% of its clients, most of which are expatriates and international investors, have sought advice about moving assets out of the UK since that now-infamous referendum of summer 2016. And deVere says the pace of clients soliciting advice has picked up during the first quarter of 2019 as the Brexit crisis worsened.
Nigel Green, founder and chief executive of deVere, commented: “The monumental level of uncertainty caused by Brexit has prompted many clients to seek established, legitimate overseas opportunities in other highly regulated jurisdictions in order to grow, build — and importantly — safeguard their wealth.”
And investors are quite right be concerned, in my opinion. It’s more than a month since Britain was originally intended to leave the European trading block, yet a variety of Brexit options remain on the table. From a fresh Conservative leadership contest to a general election, from a soft Brexit to a disorderly Brexit, from another Article 50 extension to a second confirmatory referendum. How and when the saga draws to a close remains anyone’s guess.
A step in the right direction?
But rising appetite for foreign diversification isn’t necessarily a bad thing. As Green commented, British investors should be considering diversifying their wealth with greater international exposure anyway.
“There is a strong ‘home bias’ approach which tends to distort investors’ asset allocation, and that leads to a lack of geographical diversification,” he noted. “The Brexit chaos may be a good excuse to start that much-needed rebalancing in favour of global equities, bonds and perhaps property.”
Even in less turbulent times like these it’s a good idea for share investors to diversify their portfolios by geography, sector, or even by asset classes themselves.
But in the context of keeping things stocks-related, I think a good strategy in the current climate of Brexit strife is to invest in the FTSE 100. The UK’s elite list is jam-packed with companies boasting significant international exposure to offset any turbulence facing the domestic economy. Meanwhile, a great number of these firms also report in foreign currencies, giving them an additional earnings boost in the event of a falling pound.
The risks created by Brexit are vast, but then so are the opportunities to make a fortune. The Footsie index’s rise since the start of 2019, a period beset by rising concerns over the political saga, is perfect testament to this. Be cautious, sure, but don’t stop investing. You could be missing out on some brilliant buying options.
