Experienced Investor
A year on from Brexit: the best and worst performing asset classes
June 24 marks a year since the UK voted to leave the EU. Which asset classes have performed the best and which have struggled since the shock Brexit result?
In the aftermath of the UK’s decision to leave the EU the UK stock market witnessed a sharp sell-off and the value of the pound tumbled.
However, over the past year, the UK stock market has bounced back to reach record highs due to the boost the falling pound has given to Britain’s exporters and overseas earners.
Analysis by Fidelity International reveals that if you had invested £10,000 in the FTSE 100 on 24 June, the day of the EU referendum result, you would be left with £12,565 – a 26% increase.
While UK stocks have delivered impressive returns, Fidelity’s research found several asset classes have performed particularly well.
Over the past year, Asia Pacific equities have delivered a whopping 36.89% return while Emerging Market equities have returned an impressive 36.23%. European equities have returned 35.75% since the Brexit vote.
The table below shows the total returns of various asset classes since the EU referendum results:
| Rank | Asset class | % Returns |
| 1 | Asia Pacific Equities | 36.89 |
| 2 | Emerging Market Equities | 36.23 |
| 3 | European (ex UK) Equities | 35.75 |
| 4 | Japanese Equities | 31.43 |
| 5 | Global Equities | 31.01 |
| 6 | US Equities | 30.15 |
| 7 | UK Equities | 25.63 |
| 8 | High Yield Bonds | 20.45 |
| 9 | Emerging Market Debt | 15.81 |
| 10 | Real Estate | 14.43 |
| 11 | Corp Bonds | 9.87 |
| 12 | Inflation-Linked Bonds | 8.15 |
| 13 | Government Bonds | 2.32 |
| 14 | Cash | 0.44 |
| 15 | Commodities | -0.12 |
Source: Fidelity International sourced from Datastream, June 2017. % Total returns in GBP 24/06/2016 to 15/06/2017.
Tom Stevenson, investment director for personal investing at Fidelity International, said: “For many people, the result of last June’s vote was a shock. Equally shocking was the market reaction in the following months. However, it should not have been such a surprise – the fall in the pound has been the key driver of market returns in the UK over the past year and it will be the key driver of the economy and markets over the next 12 months.
“However, in the grand scheme of things, the UK plays a small part in the overall global economy and whatever the outcome of the Brexit negotiations, the US economy will continue to recover, Europe will remain on the mend and emerging markets will continue to outstrip the growth in the developed world.
“With this in mind, it pays to have a well-diversified portfolio and, as our analysis shows, such a portfolio has delivered fantastic returns over the past 12 months.”
Stevenson suggests that for anyone looking to build a diversified portfolio, a global equity fund remains a good starting point and will be a sensible core holding for most investors.
“We continue to like the Rathbone Global Opportunities fund and Fidelity’s Global Special Situations fund,” he said.
