PA ANALYSIS: Is it time to run for safety, or has that horse bolted?

Added 27th June 2016

With 10-year gilt yields falling below 1% for the first time in history, the yen trading below 100 to the dollar and gold at $1,325 per ounce, it is clear investors are running for safety.

PA ANALYSIS: Is it time to run for safety, or has that horse bolted?

And, such a move is understandable given the chaos that has been unleashed by the outcome of Friday’s vote by the British people to leave the EU.

As, Societe Generale’s Kit Juckes summed it up: “The extent of the uncertainty that now clouds the UK’s economic and political outlook is hard to exaggerate. The Government is in limbo ahead of a Conservative Party leadership contest. The opposition is in chaos. The rest of the EU would like negotiations on the UK’s exit to begin but they have no-one to negotiate with.”

If one looks at the fund flow statistics, it is clear that investors have been weatherproofing portfolios in the run up to the vote. According to Funds Network, which put out its figures for May, the Corporate Bond, UK Money Market and Short Term Money Market sectors dominated the sales chart over the month.

And, it said, “This flight to safety was also evident in the overall fund sales in May, which saw fixed income funds such as the AXA Short Credit Short Duration Fund and the Baillie Gifford Investment Grade Long Bond Fund top the bestsellers table.”

Going forward, however, a slightly more difficult question looms for investors, does one double down on safe haven assets, or does one go into risk assets that have sold off significantly?

"Few people would advise one buy contents insurance, while one’s house is on fire."

In part, this depends on whether one thinks the worst will soon be over, or if what we have seen is just the beginning, after all few people would advise one buy contents insurance, while one’s house is on fire.

Kames Income Hub


Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

Lazard Emerging Markets
Lazard Emerging Markets

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

Geoff Candy

Group digital editor

Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.



Investment Strategy




PA Channel Island 2016
PA Channel Island 2016

8th November 2016
The Royal Yacht, Jersey


17th November 2016
The Andaz

PA Emerging Markets 2016
PA Emerging Markets 2016

1st December 2016
The Mayfair, London

Sponsored Content

Investment Strategy