The weak pound can be potentially good news for long-term investors seeking returns in an uncertain climate, as those who put their capital into investments in the United Kingdom could see their returns boosted by the depreciation of sterling.
The Bank of England may increase the base interest rate on August 2, which will strengthen sterling. However, should the Bank of England not alter the base interest rate, it is widely believed that sterling may weaken even further.
A weak pound increases the popularity of global equity income funds for investors who are nervous about being entirely reliant on the performance of the economy.
Funds across global markets, typically aim to deliver a steady income as well as capital growth. Some of the prices of these foreign investments have become more expensive due to sterling weakness, however fund managers at Triple A Investments are looking in globally diversified portfolios which reap the benefits of holdings in the FTSE 100 and the S&P 500 (US) stock markets, which are made up of primarily non UK-focused businesses who derive much of their income overseas.
Investors who prefer low risk should diversify their income and benefit from sterling’s weakness and consider investments in property development or House with Multiple Occupation (HMO) in the United Kingdom. One of the main attractions of investments in property development is the high returns on investment.
Investors considering the UK with foreign currency, especially the US dollar or dollar-pegged currencies have an advantageous purchasing power. For international investors, their purchasing advantage is on average 20% more than prior to the fall in sterling over the last three years.
Estate agents report a surge in interest from foreign buyers. There has been a marked increase in inquiries following Brexit and the demand will continue for the foreseeable future as international investors find UK assets and investments cheaper due to the weakness of sterling.
British investors can benefit from the weak pound by investing in fund holdings which derive much of their income overseas, whereas international investors can utilise their US dollar or dollar-pegged currencies and take advantage of their purchasing power to invest in property developments or HMO’s in the United Kingdom.
Contact our team to find out how we can assist for you to take advantage of the weak pound.