Brexit and US interest rates - thoughts?
Discussion
I have an S&P 500 tracker in my portfolio which is my best performer (I'm not sure what that says about the rest of my portfolio, but never mind.
)
With the referendum coming up, and noises from Washington suggesting that a rate rise is being held off pending the result, I was considering upping my stake a little since both a leave result (pound will drop 10% or so which will result in a significant upside to the sterling value of any US based shares) or a remain result (US rate hike causes dollar to surge, again with an upside to the sterling value of US shares) look to have a net positive result on a holding of such a fund.
Does anyone have any thoughts on why this might be a terrible idea, and should I just be buying tulip bulbs instead?
)With the referendum coming up, and noises from Washington suggesting that a rate rise is being held off pending the result, I was considering upping my stake a little since both a leave result (pound will drop 10% or so which will result in a significant upside to the sterling value of any US based shares) or a remain result (US rate hike causes dollar to surge, again with an upside to the sterling value of US shares) look to have a net positive result on a holding of such a fund.
Does anyone have any thoughts on why this might be a terrible idea, and should I just be buying tulip bulbs instead?
Ultimately rates have to rise, it'll happen in the US before the UK I think that's a given.
Yellen keeps spluttering quite meaningless hints that only cause caution in the US markets. Latest hint...this Month, but some of the figures weren't good.
That is of course nothing compared to the uncertainty with Brexit on your side of the pond.
Pound is at 1.45 down from 1.46. If Yellen raises rates the Dollar will gain (a little) but if the No vote wins....who knows where the Pound will settle.
If the vote goes the way it looks it will (stay) then the Pound should hold, even with a US rate increase and the FTSE should shake off the uncertainty and regain some of the ground it has lost to other Markets.
As a UK Sterling investor I think you absolutely need US exposure, 15 to 20%.
I actually prefer Allocation Funds to Index Funds, I have a hard time paying a Fund Manager to intentionally follow the market down
PRWCX, is my core choice, not avaiable in UK though, and closed to new clients here.
Diversification is really the only way to go, I am 55% US, 20% Europe (including UK) and Global Allocation with the rest.
My diversification has hurt me a little over the past 2 years, but all one can do is look forward. Had I been a 100% in the US would have been great, but I wasn't.
So if you are concerned about a no vote (I'm not) maybe increase your US exposure.
I get a lot of extra sleep at night by holding more bonds than most. Through holdings withing the Allocation funds and with Individual bond funds, done pretty good YTD on the individuals.
Yellen keeps spluttering quite meaningless hints that only cause caution in the US markets. Latest hint...this Month, but some of the figures weren't good.
That is of course nothing compared to the uncertainty with Brexit on your side of the pond.
Pound is at 1.45 down from 1.46. If Yellen raises rates the Dollar will gain (a little) but if the No vote wins....who knows where the Pound will settle.
If the vote goes the way it looks it will (stay) then the Pound should hold, even with a US rate increase and the FTSE should shake off the uncertainty and regain some of the ground it has lost to other Markets.
As a UK Sterling investor I think you absolutely need US exposure, 15 to 20%.
I actually prefer Allocation Funds to Index Funds, I have a hard time paying a Fund Manager to intentionally follow the market down

PRWCX, is my core choice, not avaiable in UK though, and closed to new clients here.
Diversification is really the only way to go, I am 55% US, 20% Europe (including UK) and Global Allocation with the rest.
My diversification has hurt me a little over the past 2 years, but all one can do is look forward. Had I been a 100% in the US would have been great, but I wasn't.
So if you are concerned about a no vote (I'm not) maybe increase your US exposure.
I get a lot of extra sleep at night by holding more bonds than most. Through holdings withing the Allocation funds and with Individual bond funds, done pretty good YTD on the individuals.
I doubt that brexit will effect US interest rates much, if will vote leave then the pound will fall I would think? The state of the US recovery and employment numbers will influence the FED far more. The latest bad NFP will probably mean that the fed will hold off from a rate raise this month. The dollar eventually will go up against the eur and gbp as the FED policy is diverging from the ECB and the BOE. But on the other hand I may be completely wrong!!! and I'm not even an economist!!!!!!
Gassing Station | Finance | Top of Page | What's New | My Stuff


