Justwealth Justwealth
  • About Justwealth
    • Who We Are
    • How It Works
    • Investment Process
    • Why Justwealth
  • Institutional
    • Overview
    • Advisor Portal
  • Pricing
  • Resources
    • Performance
    • FAQs
    • Portfolio Review
    • Blog
    • The Just Word Podcast
  • Get Started
  • Account Access
    • **New** Client Portal
    • Finish Your Application
    • Advisor Login
    • Ndex Investor Login
Justwealth Justwealth
  • About Justwealth
    • Who We Are
    • How It Works
    • Investment Process
    • Why Justwealth
  • Institutional
    • Overview
    • Advisor Portal
  • Pricing
  • Resources
    • Performance
    • FAQs
    • Portfolio Review
    • Blog
    • The Just Word Podcast
  • Get Started
  • Account Access
    • **New** Client Portal
    • Finish Your Application
    • Advisor Login
    • Ndex Investor Login
Jun 24

Brexit: What does it mean?

  • June 24, 2016
  • Exchange Traded Funds, Investing, Portfolio Management

Yesterday, a referendum was held in the U.K. to determine if the U.K. would exit the European Union, known as the “Brexit” vote. Despite advance polls indicating that the likely outcome would be for the U.K. to remain, the surprising result was a 52% majority in favour of leaving. This has already had a profound negative impact on global equity markets and is expected to carry over into North America when markets open later this morning.

The economic implications of this event are certainly not good for the U.K, or Europe in general, but more importantly for equity markets, it introduces a new element of uncertainty as there is no precedent for an event of this nature and magnitude. In times of uncertainty, investors tend to flock to the safety of government bonds, gold, and the U.S. dollar, and this is what is playing out so far today. In addition to equity markets declining, the British Pound and Euro will be pressured, and oil and other commodities may also fall.

Most Justwealth clients have exposure to equity ETFs, and some in particular will have a small exposure to the iShares Core MSCI EAFE IMI ETF, (ticker symbol XFH) which has some exposure to the U.K.

While the news is certainly not positive, it is worth noting some of the precautions we have taken in our client portfolios:

  • Compared to most other companies, we have very limited exposure to Europe and the U.K. in our client portfolios.
  • We have selected ETFs that hedge currency exposure in European countries so while the ETFs will decline with the equity markets, the ETFs will not feel the impact of declining European currencies
  • ETFs used in client accounts for U.S. markets are NOT hedged, meaning that while again these ETFs will decline with U.S. equity markets, the ETFs will benefit from the impact of a rising U.S. dollar
  • Most clients have exposure to Bond ETFs, which should do well today, proving why diversification is important. Note that higher risk bonds such as high yield or corporate bonds may not perform as well today

Today could very well be the worst equity market day for 2016, but we do not expect that this will turn into the Great Recession that we saw 8 or 9 years ago. Equity markets could rebound quickly, or they could fall further in the short run – we don’t know and nobody else does either! What is predictable however, is that short-term declines become irrelevant in the long term. We are happy to chat with our clients at any time regarding market events or our investment views.

Written by James Gauthier, Chief Investment Officer at Justwealth

  • Facebook
  • Twitter
  • LinkedIn
  • E-Mail

Comments are closed.

The Just Word Blog

We would love to hear your feedback and suggestions! Feel free to contact us at the information below

Subscribe to our mailing list

Contact Info

Phone: 1.866.407.JUST E-Mail: info@justwealth.com

Recent Posts

  • Justwealth 4Q 2022 Market Commentary
  • Justwealth 3Q 2022 Market Commentary
  • Justwealth 2Q 2022 Market Commentary
  • Justwealth May Market Update
  • Justwealth 1Q 2022 Market Commentary

Categories

  • Behavioural Finance
  • Business
  • CESG
  • Charitable Donations
  • CRM2
  • Estate Planning
  • Exchange Traded Funds
  • Health
  • Investing
  • Just thinking
  • Lifestyle
  • Mutual Funds
  • News
  • Portfolio Management
  • RESP
  • Retirement
  • Robo-Advisor
  • RRSP
  • Sports
  • Taxation
  • TFSA
  • Travel

About Us

  • Who We Are
  • How It Works
  • Investment Process
  • Why Justwealth
  • Pricing


Resources

  • Get Started
  • Investor Login
  • Advisor Login
  • Account Requests
  • RESP
  • Tax-Efficient Investing
  • Group RRSP & TFSA
  • Portfolio Review
  • Blog Posts
  • The Just Word Podcast
  • FAQs
  • Performance

Institutional

  • Overview
  • Advisor Portal

Legal

  • Terms of use
  • Privacy Policy
  • Conflicts Disclosure

Contact

18 King Street East, Suite 1400 Toronto, Ontario M5C 1C4 Phone: 1-866-407-JUST (5878) E-Mail: info@justwealth.com

Subscribe to our mailing list



Justwealth Financial Inc., operating as Justwealth, is a registered Portfolio Manager in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador and Yukon. By using this website, you accept our Terms of Use and Privacy Policy. Copyright 2023 Justwealth Financial Inc. All rights reserved.