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?
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.
