The outcome of the vote on 23 June is still very much anyone’s guess and a Brexit would almost certainly result in poor UK stock market performance, at least in the short term. The reason for this is that the UK economy is expected to shrink over the next few years if we do decide to leave, and scores of companies doing business with and in Europe might find their contracts affected.

To what extent these factors would actually transpire will not be known in the immediate aftermath but, as always, markets move on sentiment and future outlook, so in a way perception is what will matter most on June 24.

That said, the UK equity market remains cheap relative to cash and bonds at the moment. Dividend payments may not be growing as fast as they have in the past, but dividend yields are still at nearly 100-year highs versus 10-year UK government bond yields. And at least in equities, you still have a chance of making money.

With these elements in mind, there are a couple of different ways investors may look to position themselves as the vote draws ever closer.

Safety first

More often than not right now, I’m being asked about how to protect money. It’s not just investors choosing funds or stocks that have this focus, fund managers themselves are changing asset allocations in their portfolios to minimise the impact of volatility.

As always, traditional ‘safe havens’ are popular. Gold and gold equities have had a roaring start to the year and may help protect investors if a Brexit does occur (although gold equities may experience some general stock market volatility). The Elite Rated BlackRock Gold and General fund invests in a mix of the physical commodity and mining company shares.

US treasury bonds can also be useful for reducing your overall portfolio risk. They have the added benefit of being denominated in US dollars, which could be handy if a vote to leave transpires in severe falls in the value of sterling. Holding assets in other currencies, which would then be worth more when converted back into pounds, is another way to potentially preserve your capital. A global equity fund like the Elite Rated Sanlam FOUR Stable Global Equity could help to diversify.

I also like the Elite Rated M&G Global Dividend, which is a strong candidate for investors who are concerned about relying overly on UK companies for their dividend yield. Brexit isn’t the only reason to diversify on this front; the latest Henderson Global Dividend Index shows UK dividend growth has lagged the world average by some 15% since 20093.

Keeping cash aside

Another move some fund managers are making at the moment is to increase their cash holdings. On the one hand, this is yet another way of reducing risk. On the other, managers such as David Coombs, who runs the Elite Rated Rathbone Strategic Growth Portfolio among other multi-asset funds, say they are keeping a higher-than-usual allocation of cash aside, in part to take advantage of opportunities that may arise after the referendum.

If we vote to stay, these opportunities could pop up in small- and mid-cap UK stocks, whose earnings are often generated domestically and who have therefore struggled more than the internationally-focused large caps pre-referendum. The Elite Rated Franklin UK Mid Cap and Neptune UK Mid Cap are two funds I like in this space.

Darius McDermott is managing director of Chelsea Financial Services