Something else to keep in mind when deciding on a UK weighting is that referendum uncertainty in the build-up, and in the event of a vote to leave, is much more a fixed income and currency issue than something directly impacting UK companies’ performance in the short term. A falling pound actually helps exporters of course.
Another interesting – and paradoxical – element to all this is that fund managers are saying one thing and doing another, rather than putting their money where their mouth is. BAML’s survey found that 71% of asset managers it talked to see a vote to leave as ‘unlikely’ or ‘not at all likely’, yet they are still cutting allocations to the UK.
These professional investors are either not as sure of the outcome as these numbers imply, or they are simply following the crowd in a ‘groupthink’, which is exactly what creates the kind of opportunity contrarians thrive on. There is naturally always the danger that fear can trump logic though.
