With the ramifications of last night’s election vote still being assessed, the popular phrase ‘Keep Calm & Carry on’ continues to ring true for your investments. Portfolios recommended by Ethical Futures are structured to reflect your personal tolerance for volatility and also your own capacity for loss. As investment managers tend to take a more ‘defensive’ approach ahead of elections and, as the narrowing polls have suggested a reduction in the Conservative majority in parliament, there should hopefully not be any real shocks to the market. At time of writing, the FTSE 100 is up and 250 just a bit down, with sterling taking a bit of a knock in early trading against other global currencies.
In the short term, this is unlikely to significantly impact on interest rates but there may be a benefit accruing to large businesses with significant overseas earnings – which will benefit from repatriating that income to the weaker British Pound.
In the medium to longer term, I suppose it really depends on how the government manoeuvres and how Brexit talks turn out. We hear talk of a softer Brexit and great greater focus on positive relations with Europe. This would certainly bode well for European focussed business. In the medium to longer term, were the May government to fail and Labour to come into power, then this would herald a shift in many aspects of our economy. For the ethical Investor, the impacts of labour policy (though possibly welcomed by our investors) would be impacts on the valuations of investments such as water, transport and other utilities – which since privatisation, have been a common feature in ‘ethical’ funds. On the flipside of this, there is likely to be positive support for the UK economy from a Labour policy to increase public sector pay, invest in healthcare and education and support infrastructure spending via a development bank.
So – “interesting times” as they say – we’ll keep watching this space.