A sterling rally could hit UK investors' returns because most independent financial advisers and wealth managers have not hedged foreign currency holdings into sterling. Investors in foreign assets profited when sterling fell sharply after the Brexit vote in 2016. However, the opposite will happen after the UK leaves the EU, regardless of how, said Christopher Peel, the CIO of Tavistock Wealth. Peter Sleep, a senior investment manager at 7IM, explained that government and corporate bonds are systematically hedged but equities are not. The pound has fallen by about 10% against other major currencies since June last year as investors fear it is vulnerable to further falls if Britain votes for Brexit.
A sterling rally could hit UK investors' returns because most independent financial advisers and wealth managers have not hedged foreign currency holdings into sterling. Investors in foreign assets profited when sterling fell sharply after the Brexit vote in 2016. However, the opposite will happen after the UK leaves the EU, regardless of how, said Christopher Peel, the CIO of Tavistock Wealth. Peter Sleep, a senior investment manager at 7IM, explained that government and corporate bonds are systematically hedged but equities are not. Peel said the Financial Conduct Authority is aware of the risk but lacks the power to address it.