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How the election has changed the investment outlook

Missed our client call on the general election result? Here are the key quotes.

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A big victory for the Conservative on Friday has created a clear path to Brexit and a sense of political certainty, and markets have reacted with immediate relief.

But looking beyond the initial reaction and understanding what has changed – and what remains the same – will be crucial as for investors in the year ahead.

Mohammad Kamal Syed, Head of Asset Management

Alan Higgins, Head of Portfolio Construction

Sven Balzer, Head of Investment Strategy

Our investment experts – Sven Balzer, Head of Investment Strategy, Alan Higgins, Head of Portfolio Construction, and Mohammad Kamal Syed, Head of Asset Management – considered the changed circumstances and answered our clients’ questions on a conference call on Friday afternoon. Here are the highlights.

“A pause in the trade war, coupled with support from central banks, could be decisive in turning stabilisation into an actual pick-up and more positive economic momentum going forward.”
Lilian Chovin, Coutts Investment Strategist

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What the election result means for the UK economy

Sven Balzer: “Markets are enjoying the election result because it removes any political uncertainty, at least for the next six months. Clearly Brexit is now going to happen. Any scenario of a second referendum is off the cards. Any no-deal Brexit is also off the cards.

“This should encourage foreign capital back into the UK, especially international investors who are currently underweight to the UK in general. UK companies have held back on investing in their business for some time now, and there should be at least a partial recovery .

“There should also be some fiscal stimulus coming from the government, not huge but something.

“All of this, along with the more orderly path forward we now have, should lead to a pick-up in the UK economy.”

Mohammad Syed: “From an investment perspective, the clear outcome of the election is very positive news for markets. We believe it creates greater stability for the country, stability that has arguably been absent since 2016.”

Impact on our investment approach

Alan Higgins: “We are a global investor. A balanced portfolio at Coutts is around 50% equities. Out of that 50%, circa 20% is invested in UK equities, so the majority is actually outside the UK.

“The way we manage portfolios is to avoid binary bets, such as having a portfolio orientated towards 100% sterling, very domestically orientated. What we’ve done is tilted the portfolio in the UK towards more domestic themes, and that’s worked well.”

What the election result means for the UK economy

Sven Balzer: “Markets are enjoying the election result because it removes any political uncertainty, at least for the next six months. Clearly Brexit is now going to happen. Any scenario of a second referendum is off the cards. Any no-deal Brexit is also off the cards.

“This should encourage foreign capital back into the UK, especially international investors who are currently underweight to the UK in general. UK companies have held back on investing in their business for some time now, and there should be at least a partial recovery .

“There should also be some fiscal stimulus coming from the government, not huge but something.

“All of this, along with the more orderly path forward we now have, should lead to a pick-up in the UK economy.”

Mohammad Syed: “From an investment perspective, the clear outcome of the election is very positive news for markets. We believe it creates greater stability for the country, stability that has arguably been absent since 2016.”

Impact on our investment approach

Alan Higgins: “We are a global investor. A balanced portfolio at Coutts is around 50% equities. Out of that 50%, circa 20% is invested in UK equities, so the majority is actually outside the UK.

“The way we manage portfolios is to avoid binary bets, such as having a portfolio orientated towards 100% sterling, very domestically orientated. What we’ve done is tilted the portfolio in the UK towards more domestic themes, and that’s worked well.”

When investing, past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.

Find out more about investing with Coutts. Speak to your private banker or wealth manager to find out more.

About Coutts Investments

With unstinting focus on client objectives and capital preservation, Coutts Investments provide high-touch investment expertise that centres on diversified solutions and a service-led approach to portfolio management. Our investment process is as disciplined as it is creative – ensuring tailored solutions with robust results.

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