A cornerstone allocation for pension funds seeking income and return

With the Brexit referendum now months behind us, uncertainty looks set to shape the investment agenda for some time to come. But in the mature UK market, this sentiment is creating exciting opportunities for investors to enhance value by exploiting short-term market mispricing. And in the continental European market, investors are finding complementary opportunities to explore the potential of core to deliver the sustainable income streams they need, says Tony Brown, CIO at M&G Real Estate.

Few anticipated the final outcome of the Brexit referendum, and the capital markets were no exception, bearing the full brunt of the unexpected “Leave” decision by UK voters. Straight after the vote, sterling tumbled into free fall, losing more than 10% against the US dollar and hitting a 31-year low in the process. But while the initial impact to the markets was dramatic, it was also short-lived. The sharp, uncertainty-driven slowdown in the economy that many predicted has so far failed to materialise, with GDP growing at a healthy 0.5% pace in the third quarter of 2016. Sentiment also bounced back, with British consumers and businesses determined to return to business as usual in the wake of the vote.

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