Don’t Bet on Brexit – or Other Binary Outcomes

Fidelity Solutions explains why it’s important to take into account political risk, but not construct a portfolio around it

Fidelity International 22 June, 2016 | 9:30AM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. James Bateman, head of portfolio management at Fidelity Solutions – the company’s multi asset team – explains about the different types of risk today’s investors face.

Over the past couple of months, one of the big worries I have noticed investors asking us about has been Brexit - the risk of the UK voting to leave the European Union.

Brexit is an example of what I would call a binary outcome, where you face a risk that will be resolved at a fixed point in the future, and contrasts strongly with what we might term ‘market’ or ‘economic’ risks, which tend to be more dynamic.

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Fidelity International

Fidelity International  

is a global leader in asset management, providing investment products and services to individuals and institutions in the UK, continental Europe, the Middle East and Asia Pacific.