Any stress testing must include scenarios customised to your personal portfolio and be aligned with your investment strategy. This should include risks applicable to the industries, funds and assets you have invested in. Asset managers should ensure that their testing includes dummy effects, to mimic global uncertainties and exposures that are inevitable in our unpredictable climates.
Finally, in a low growth environment, ensuring that a portfolio is being run in the most cost-efficient way possible will be an important factor to ensuring investment success. You should trim unnecessary costs and fees to help reduce your portfolio’s expenses to a minimum. This does however need to be balanced with the need to employ high quality managers to navigate through any market disruption while the UK negotiates its exit from the EU.
The Brexit vote has shone a light on potential investment vulnerabilities globally, from banks to individuals. While the UK’s vote to leave the EU is a unique scenario with global implications, not all economic conditions will have the same reach and impact – thus testing must be thorough, adaptable and regular to ensure the greatest protection for assets in the years to come.
Adam Benskin is director at Strabens Hall
| Key Points |
Understanding how much a portfolio will be impacted by Brexit fallout will be mainly governed by how domestically-orientated a portfolio is positioned. A globally diversified sterling-reporting portfolio should not be heavily impacted over the shorter term by a further sell off in sterling. Ensuring that a portfolio is being run in the most cost-efficient way possible will be an important factor to ensuring investment success. |
