Today’s news that British voters have chosen to leave the European Union has caused a great deal of uncertainty for investors and agitated global stock and bond markets. The big question is what does this mean for global economies? Honestly, no one really knows. The UK is the first country to leave the union, and while the vote to leave is not binding, it is highly unlikely that Parliament will not honor the wishes of the English people. The UK is the world’s fifth-largest economy and many businesses use it as an entry point to European markets. Economists and business owners are now worried about the implications on trade arrangements, currency fluctuations and slower economic growth in the UK. The most immediate economic impact may be on US exports as a strengthening dollar versus foreign currencies makes US goods and services more expensive, but on the flipside dollar strength could prompt the Federal Reserve to hold off on any rate increases which is good for US consumers. Adding to the uncertainty, other continental members may also consider exiting the European Union which could cause the European Monetary Union to unravel. It seems likely that volatility in global capital markets will increase and be with us for several months until the full impact of Britain’s decision becomes apparent.
From a portfolio perspective, Friends Fiduciary continues to manage its Funds with an eye towards long-term capital appreciation while avoiding the temptation to react to near-term gyrations in markets. In times of volatile markets, we mitigate market risk by investing across a diverse set of asset classes, investment styles and geographies believing that portfolios are best protected by maintaining a well-balanced, diversified allocation to global stocks and bonds. We are in constant contact with our managers and have great confidence in their abilities to navigate an event such as this. As a steward entrusted with managing assets for Quaker constituents across the country, we take our responsibility very seriously. Our long-term results validate our investment approach and demonstrate that we deliver strong returns while investing consistent with Quaker values. Please contact us with any questions.
Richard Kent, CFA
Chief Investment Officer
215-241-7272
rkent@friendsfiduciary.org
www.friendsfiduciary.org