Brexit ain't so bad, say fund managers and institutional investors

Fund managers and institutional investors think that Brexit challenges may be overstated, according to a new survey from asset management consultancy MJ Hudson.

Although 17 per cent of fund investors based outside the UK said they felt the country was less attractive since Brexit, the same percentage said that either markets had performed better than they expected or that the vote to leave the EU had proven a “shot in the arm” for the UK.

Most fund managers and investors still said that Brexit would have a negative impact on the UK asset management industry, but added that their emphasis was on allocating between different asset classes rather than specific regions in Europe.

“Institutional investors take a much more asset class-driven view than fund managers imagine and, whilst individual UK asset classes may see some outflows from international investors, the net impact on the UK industry is unlikely to be as severe as some managers in the UK might have feared,” said MJ Hudson's Matthew Craig-Greene.

In their particular asset class, 41 per cent of fund managers expected UK products to see reduced allocations while 16 per cent expected an increase.

Investors, meanwhile, were divided on whether UK products in general would see more money or less – 28 per cent said there would be reduced allocations but almost as many (25 per cent) anticipated an increase.

It isn't all rosy

However, not all investors were quite so chipper about the post-Brexit outlook.

David Coombs, a fund manager at Rathbones, said: “The UK continues to look weak to us. The consumer is going backwards, growth is faltering and the government is rudderless. Add in the long-shot risk of Jeremy Corbyn’s Labour Party taking power, and you’ve got a very unappealing investment landscape indeed.

“We would change our mind if support starts to form for a second referendum on Brexit. This is unlikely, but not impossible and the chances of it seem to be rising. We believe that, if a vote was held today, remain would probably carry the day. That would probably lead to a substantial rally in sterling, a renewal of business investment and a fillip to UK consumers.”

MJ Hudson's report noted that UK corporate bonds were suffering, some hedge funds had signalled a move away from the UK and certain fund managers predicted a shift from UK listed equities.

It predicted the main beneficiaries would be the US, real assets, venture capital and non-UK private equity funds.

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