When she called for the vote in April, prime minister Theresa May had a 20-point lead over Labour in the polls.
Ugo Lancioni, senior portfolio manager, currencies at the group, said: “David Cameron gambled that a resounding Remain vote in an EU referendum would silence Conservative party eurosceptics.
“Theresa May gambled that a snap election would strengthen her hand in the forthcoming Brexit negotiations."
John Stopford, manager of the Global Multi-Asset Income Fund and head of multi-asset income at Investec Asset Management, said with formal Brexit negotiations due to start just 10 days’ after the election, significant potential for big moves can be expected in sterling and UK assets over the coming days and weeks.
In terms of his sterling exposure in Global Multi-Asset Income, Stopford said last night: “We are going into the election with a small short position in the pound and some exposure to UK exporters in equities, but we have also bought both one-month calls and puts on sterling.
"In the face of uncertainty, corporates and individuals have been keeping their purses closed"
“Our inclination is to fade large moves in either direction viewing the pound as likely to be range bound between 1.35 and 1.20, albeit with a downside bias given Brexit uncertainty.”
Neil Birrell, chief investment officer at Premier Asset Management and manager the its multi-asset Diversified fund, said the fund has around 22% exposure to UK with two-thirds in small and mid caps.
To shield against any surprise move, the group had placed a hedge on much of its mid-cap exposure, though he admits it has been difficult to secure a “perfect” hedge at the price they were willing to pay.
He put a hedge on at £1.20 against the greenback, which worked in their favour, the trade having since moved up to £1.30, so they took the hedges off.
“We now have about 35% of the fund in non-sterling currencies – mostly dollar and euro,” he said.