safer investments for rising pound

AnotherJoe

I think as numerous Brexit scare stories occur over the next few months, then A50 is triggered, then withdrawal, due to uncertainty the Pound is only headed one way for the next 2 years at least.

ruperts

Interesting post and you may well be right.


How common is that type of catalyst though? Is there any historical precedent for an event such as brexit providing the catalyst for a revaluation which is actually based on something separate like the account deficit?

Glen_Clark

The pound has been boosted by dirty foreign currency flowing into London to buy up property. A safe place for foreign Dictators and Criminals to have a bolt hole making use of Britains opaque property ownership laws and lowest council taxes in wealthiest areas, our own unelected Head of State rolling out the red carpet at Buckingham Palace for Unelected Dictators with appalling human rights records like King Saud - so they have bought estates in London.
We've been selling off our industries too - even power and water supplies. But you can only sell this stuff once. Then we are left with a persistant current account deficit so the pound was bound to drop. Brexit just brought it on a bit sooner.

dunstonh

Sterling was overvalued for a long time. It was ripe for a drop but it was kept high as many of the alternatives were in a worse state. The referendum result gave it the push it needed. It could well end up lower depending on what the outcomes are in the future. The only way it will return to somewhere near where it was is if brexit was halted and the Euro got worse.

When you run a deficit, you make up the difference with taxation, sale of assets and/or devaluation. The latter is years overdue.

newbie84

Last week, sterling was 0.82p per dollar, Now its 0.78p

My HSBC american index is still showing a gain of = 28.1 percent
My threadneedle american smaller cos is still showing a gain of = 29.1 percent

those were the two funds I was going to sell, and move it into something like

Scottish Mortgage investment trust

HOWEVER, that has a lot of US based stocks too, so I was thinking something like FTSE 250

Yes I know timing the market is bad, but its possible the pound could rise another 10 percent fairly quickly, it is certainly possible

grey_gym_sock

newbie84 wrote: »

its possible the pound could rise another 10 percent fairly quickly, it is certainly possible

it's possible. it's also possible it could fall another 10% . in reality, nobody knows what it will do next.

why not hold a portfolio which includes both a US tracker and a FTSE 250 tracker (and various other things)? that way, some part of your portfolio will be gaining from whatever the pound does next.

i assume i am ignorant (since i am), and construct my portfolio based on that.

newbie84

grey_gym_sock wrote: »

it's possible. it's also possible it could fall another 10% . in reality, nobody knows what it will do next.

why not hold a portfolio which includes both a US tracker and a FTSE 250 tracker (and various other things)? that way, some part of your portfolio will be gaining from whatever the pound does next.

i assume i am ignorant (since i am), and construct my portfolio based on that.

Yep, I already have substantial amount in HSBC ftse 250.. the american funds make up around 10 percent of portfolio

veryintrigued

Italian lira for me!

grey_gym_sock

newbie84 wrote: »

Yep, I already have substantial amount in HSBC ftse 250.. the american funds make up around 10 percent of portfolio

great. so my suggestion is: stop worrying.

bowlhead99

newbie84 wrote: »

Yep, I already have substantial amount in HSBC ftse 250.. the american funds make up around 10 percent of portfolio

Scottish Mortgage has under 50% of its investments in North America. So if you flipped your american funds into that, you would be down to ~5% in that region (assuming the rest of your portfolio does not have any North American or Canadian stocks within other funds you may hold).

That wouldn't seem a lot, given the US is the largest equity market in the world, and Scottish Mortgage is very focussed on only buying specific types of company that meet its criteria so you would have concentrated your portfolio in fewer underlying assets. SMT is a decent fund but high risk and driven by the manager's strong convictions for particular business types.

I would agree with ggs that if you're only talking about a small portion of your assets and you don't know which way the currency is going next anyway, it doesn't seem worth diving out of those funds to find 'safety' in shares in other countries. Unless you were proposing to go and get something that was a different type of asset entirely, like moving out of equity to property or bonds or cash because you no longer wanted the risk of equities.

Maybe more of a concern is that if 10% is in American funds then perhaps your other 90% is in UK 250 which would be a pretty strong concentration. So instead of making an effort to 'cement them gains' perhaps you should consider 'going to get more gains' by diversifying more internationally instead of being stuck in UK / UK250, which may pay off if the pound devalues further as some here have speculated.

But bottom line is none of us know what's next.