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How to Make your Investment Portfolio Brexit-proof

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By Rlevente from Wikimedia Commons [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)]
As Britain’s scheduled departure from the EU draws ever closer, the prospect of a no-deal exit becomes increasingly realistic. This would not only force the government to make significant spending cuts, but it also undermines Prime Minister Theresa May’s claim that the NHS would benefit from a so-called ‘Brexit Dividend’ after March 29th 2019.

A number of industries would also suffer adversely in the wake of a no-deal Brexit, while investors would need to review their portfolios in order to ensure that they remain profitable.

In this post, we’ll look at how you can make your investment portfolio Brexit-proof and potentially profit from increased volatility following the UK’s exit from the EU.

Hedge Against the Pound

If you’ve learned forex trading through online platforms, you’ll know that currencies represent a particularly volatile and malleable asset class.

You may also be aware that Brexit has continued to wreak havoc on the value of the pound, while it continues to trade within a restricted and narrow range as negotiations continue.

The pound recently declined following reports that talks between the UK and the EU had stalled, while a no-deal Brexit scenario would see its value plunge even further in the near-term (in the same way that the GBP sunk to a 30-year low following the announcement of the referendum result in the summer of 2016).

As an investor, it would be wise to refrain from backing the pound post-Brexit, as you instead look to hedge against this currency while favouring the USD and the EUR.

Understand Which Industries will be Harder Hit

It’s fair to say that not all industries are created equal, which means that while some will be hit extremely hard by Brexit others will cope relatively well.

It’s important that investors recognise this, particularly if they trade primarily in stocks and commodities.

After all, this will enable them to recognise which firms and industries are likely to see their share values increase post-Brexit, while also identifying those that are expected to become less valuable over time.

This will ensure that you restructure your portfolio in line with the wider economic climate and optimise your chances of maintaining a viable level of profitability.

Consider Investing in Secure Stores of Wealth

A no-deal Brexit scenario would impact on regions outside of the UK, with EU member states and nations further afield likely to suffer from a pronounced decline in this instance.

This would create an extremely volatile global financial marketplace, which would appeal to investors with an appetite for risk and short-term gains. It would be extremely challenging for risk-averse investors, however, who may want to invest in more secure stores of wealth if they’re to avoid the Brexit fall-out.

Gold is known to increase in value during austere economic times, for example, as it provides tangible wealth that requires investors to assume ownership of the underlying asset.

The Japanese Yen may also offer value in the post-Brexit climate, especially if you want to introduce some stability into your investment portfolio and consolidate for a sustained period of time.

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