Fidelity: Brexit poses opportunity for active management

Active asset managers can see opportunities after the United Kingdom’s decision to exit the European Union, according to Jurrien Timmer, director of Global Macro at Fidelity Investments.

“To me this kind of regime shift should be an opportunity for active management, since there should be more dispersion in performance between industries with pricing power and those without,” Timmer said.

The executive said it is important for the typical investor to have a plan and stick with it.

“Don’t be your own worst enemy by reacting emotionally. Your investment mix should be based on your time horizon, financial circumstances, and risk tolerance,” Timmer said.

“So, my suggestion for the typical investor is this: If your plan was the right one the day before Brexit, it is still good the day after,” he said.

Brexit may be a sign of degobalization, Timmer said, but it also could help keep rates low, and lead to more fiscal stimulus.

“With monetary policy (Fed rate cuts) having done most of the heavy lifting over the past seven years, and with central banks increasingly out of ways to stimulate further, I believe the focus will shift increasingly to fiscal policy, especially if the political pendulum swings further towards populism,” Timmer said.

“The UK may well be the first country to go down this route, with the U.S not far behind regardless of who gets elected in November. Increased fiscal stimulus (if done right) should provide a boost to nominal growth, and could offset the negative headwinds of deglobalization to some extent,” he said.

 

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