UBS House View Monthly

The UBS House View Monthly presents the latest version of the UBS Investment House View, assessing the impact of current economic trends on asset classes and portfolio allocation.

Five investment lessons from Brexit

About a month has passed since the UK’s vote to leave the EU, and much has been written on the subject. Is Brexit important for markets? After talking to investors around the world, I can tell you that opinions continue to vary on the significance of the UK’s decision. In the US, for example, many think that this is just politics, and has little to do with markets. Yet, I believe we can learn from Brexit, and in this letter I outline five key lessons for investors.

  1. It is not going to get easier to forecast political outcomes over the next 12 months.
  2. “The future” matters today as globalization and technology have major consequences.
  3. Investors in developed markets cannot afford to ignore currency volatility.
  4. Diversification is becoming even more important to combat price swings.
  5. Longer term, central bank policy and economics still trump political risk.

These lessons are at the heart of both our long-term strategic and our short-term tactical asset allocations. We have made three changes to our tactical asset allocation this month. We are increasing our overweight in US equities versus high grade bonds, introducing an overweight in emerging market equities versus Swiss equities, and taking profits on our successful overweight on euro-denominated high yield bonds.

Mark Haefele
Global Chief Investment Officer Wealth Management


UBS House View Monthly Letter

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