Key Takeaways
- • Investment consultant bfinance expects Brexit to have a relatively mild impact on global equities and bonds, with more direct effects concentrated in UK assets, according to its study "Brexit, One Month On-Working Through the Investment Implications."
- • bfinance identifies liquid alternatives as likely beneficiaries, citing increased dispersion from greater uncertainty at both stock and sector level.
- • bfinance sees private debt, including corporate, real estate and infrastructure debt, benefiting from relatively high yields, reduced bank competition and resilience to value and cashflow downturns, particularly for senior debt.
- • Gold and government bonds (govies) are cited as safe havens, and the US equity market benefited to a certain extent from a flight to quality.
Summary
According to investment consultant bfinance, a number of asset classes have benefited from the Brexit vote, with gold and government bonds (govies) viewed as safe havens. In its study "Brexit, One Month On-Working Through the Investment Implications," bfinance notes that US equities also benefited "to a certain extent" from a flight to quality by equity investors.
Overall, bfinance believes Brexit will probably have "a relatively mild impact on global equities and bonds, but to have a more direct impact on those asset classes within the UK." The consultant's view is that the effects will be concentrated in UK markets rather than spread across global portfolios.
bfinance highlights liquid alternatives and private debt as two asset classes likely to perform well in the post-Brexit environment. Liquid alternatives, it argues, will benefit from increased dispersion arising from greater uncertainty at both the stock and sector level.
Private debt, which bfinance defines as including corporate, real estate and infrastructure debt, is expected to benefit from relatively high yields, reduced competition from banks, and resilience to a downturn in values and cashflows. The firm specifies that this advantage applies particularly to more senior debt, and less so to higher yield or mezzanine debt, which has less of a cushion to protect loans from value declines.
Overall, bfinance believes Brexit will probably have "a relatively mild impact on global equities and bonds, but to have a more direct impact on those asset classes within the UK." The consultant's view is that the effects will be concentrated in UK markets rather than spread across global portfolios.
bfinance highlights liquid alternatives and private debt as two asset classes likely to perform well in the post-Brexit environment. Liquid alternatives, it argues, will benefit from increased dispersion arising from greater uncertainty at both the stock and sector level.
Private debt, which bfinance defines as including corporate, real estate and infrastructure debt, is expected to benefit from relatively high yields, reduced competition from banks, and resilience to a downturn in values and cashflows. The firm specifies that this advantage applies particularly to more senior debt, and less so to higher yield or mezzanine debt, which has less of a cushion to protect loans from value declines.
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