We are of the view that Brexit is likely to be a protracted divorce through which the UK economy is likely to suffer. There is also likely to be some spillover to continental Europe. We would avoid businesses leveraged to UK GDP in the near term and be very selective on stocks materially exposed to the European economy. We expect health care, select consumer, telecommunication services sectors to do well through the uncertainty because of their defensive earnings. Gold should remain well bid as would interest rate sensitive sectors like infrastructure and REITs as rates remain lower for longer. Tilting the portfolio towards quality stocks in these sectors would be one way to take evasive action. Running higher levels of cash would also be a reasonable strategy. (Prasad Patkar, Portfolio Manager)
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