Here’s How to Allocate Assets in a Post-Brexit World

The world has changed as a result of Brexit and investors need to be prepared should a similar game-changing event occur again, says Charles Reinhard, head of portfolio strategy at MainStay Investments. 'Investors need to build portfolios that can withstand multiple shocks like Brexit through diversification and by finding ways to participate and protect at the same time,' said Reinhard. He added that valuations in international equities are especially attractive on the weakness in the current marketplace. Nevertheless, the currencies associated with buying foreign stocks can be hard to predict. For example, in the 30, 60, and 90-days leading up to the Brexit vote, the British pound appreciated and depreciated approximately 50 percent of the trading days against the Euro and U.S. dollar. The same can be said for the Euro against the U.S. dollar. 'We believe a 50 percent currency hedge on international equity exposures represents a thoughtful way to manage these ups and downs,' said Reinhard.