The pound sterling slumped to a 30-year low while the UK’s benchmark FTSE 100 index fell as much as 9.4% in early trade. This came as Britain voted to exit the European Union on Friday, prompting UK Prime Minister David Cameron to announce his plans to resign.
The impact of Brexit will be seen in funds invested in UK equities. The most heavily exposed are two UK-focused funds: the $362 million Schroder ISF UK Equity and $171 million Fidelity United Kingdom (see table for a complete list). Meanwhile, the weak sterling will also affect the $5.8 billion SSgA Liquidity I Stable NAV short-term money market fund.
Note: Data sourced from Morningstar Direct. Returns as at June 22 and in Singapore dollar terms
Should investors jump into these funds if they fall? Gareth Isaac, fixed income portfolio manager at Schroders, believes that the longer-term impact of Brexit for the UK economy and financial markets could be worse.
“The full extent of the UK’s new trading relationship with the EU will not be finalised for many months and potentially years. This level of uncertainty will likely have a significant impact on investment and job creation for the UK economy, at least while the negotiations take place. We may begin to see UK-based manufacturers moving production to mainland Europe in expectation of trade barriers and tariffs against UK goods."
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The impact of Brexit will be seen in funds invested in UK equities. The most heavily exposed are two UK-focused funds: the $362 million Schroder ISF UK Equity and $171 million Fidelity United Kingdom (see table for a complete list). Meanwhile, the weak sterling will also affect the $5.8 billion SSgA Liquidity I Stable NAV short-term money market fund.
Fund Name
(Sorted by UK Equity Exposure) | Morningstar Category | Fund Size ($ mil) | YTD Returns (%) | UK Equity Exposure (%) | Portfolio Date |
| Schroder ISF UK Equity A Acc | UK Large-Cap Blend Equity | 362 | -7.4 | 94.2 | Apr 30, 2016 |
| Fidelity United Kingdom A-GBP | UK Large-Cap Growth Equity | 171 | -11.1 | 86.4 | May 31, 2016 |
| Fidelity European Sm Cos A-EUR | Europe Small-Cap Equity | 1,483 | -5.6 | 42.9 | May 31, 2016 |
| Aberdeen SP Euro Opps SGD | Europe Large-Cap Blend Equity | 49 | -4.0 | 42.5 | Mar 31, 2016 |
| Capital Group Eurp Gr & Inc (LUX) B | Europe Large-Cap Blend Equity | 871 | -7.9 | 41.1 | May 31, 2016 |
| BGF European A2 EUR | Europe Large-Cap Blend Equity | 6,715 | -9.0 | 39.7 | May 31, 2016 |
| Schroder ISF Europ Eq Alpha A Acc | Europe Large-Cap Value Equity | 1,083 | -6.0 | 38.8 | Apr 30, 2016 |
| Parvest Equity Europe Small Cap C C | Europe Mid-Cap Equity | 2,887 | -6.9 | 37.7 | Apr 30, 2016 |
| Henderson European Property | Property - Indirect Europe | 28 | -1.4 | 37.3 | Dec 31, 2015 |
| Parvest Equity Best Sel Europe I | Europe Large-Cap Growth Equity | 2,509 | -5.4 | 36.8 | Apr 30, 2016 |
Should investors jump into these funds if they fall? Gareth Isaac, fixed income portfolio manager at Schroders, believes that the longer-term impact of Brexit for the UK economy and financial markets could be worse.
“The full extent of the UK’s new trading relationship with the EU will not be finalised for many months and potentially years. This level of uncertainty will likely have a significant impact on investment and job creation for the UK economy, at least while the negotiations take place. We may begin to see UK-based manufacturers moving production to mainland Europe in expectation of trade barriers and tariffs against UK goods."
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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