Ahead of the Brexit referendum on 23 June, James Butterfill, Head of Research and Investment Strategy at ETF Securities comments:
\n\u201cMost investors believe that the greatest short-term impact – of fear of Brexit rather than Brexit itself – will be on sterling and consequently we have seen a big rise in short positions in our short-GBP ETFs. As we believe that Brexit is unlikely we see this as a buying opportunity for long-GBP.<\/p>\n
\u201cWhile we have not heard of clients actively adapting their portfolios we have seen them planning from a risk perspective and part of this has been to purchase short-GBP as a form of hedging. Many clients were already underweight UK equities due to continued malaise in the commodity and financial sectors as the FTSE 100 comprises almost 55% of these sectors alone.<\/p>\n
\u201cThe main conversations that investors are having regarding the upcoming Brexit referendum are related to the divergence between the online polling and telephone polling, the bookies and regional\/demographic biases in the polling data. Most see that when the pollsters provide a \u201cdon\u2019t know\u201d response most of those individuals have historically voted for the status quo, when polls are adjusted for this the gap is much wider than the polls say. There is a belief that bookies tend to be a closer representation of the public\u2019s views and that pollsters often have regional and demographic biases that were revealed in the election last year.<\/p>\n
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