Colin Lawson, managing partner of Equilibrium Asset Management, Wilmslow
By Shelina Begum/ Evening News Manchester
On the day of the result, the firm instructed the sale of all remaining holdings in anticipation of a weakening of commercial property prices.
A north west-based wealth and investment management firm has sold all of its commercial property investments following the Brexit vote. Foreseeing uncertainty ahead of the referendum, Equilibrium Asset Management, which held around £130m in several commercial property funds last year, made some big precautionary switches equating to around 7 per cent of portfolios in March and April this year.
Just prior to the vote, the firm sold a further 3 per cent effectively halving property exposure from 2015. On the day of the result, the firm instructed the sale of all remaining holdings in anticipation of a weakening of commercial property prices.
Colin Lawson, founder and partner of Equilibrium said: “As an asset class, property last year formed around 22 per cent of our strategic, long term balanced portfolio.
“In order to prepare for the referendum outcome, we foresaw the need to mitigate risks, limit exposure and free up funds to seize upon any arising investment opportunities in order to keep outperforming the market. “Risks such as sterling weakness deterring overseas buyers, a possible drop in demand for City offices and a reduced appetite for speculative properties if London’s position in the EU is diminished due to economic volatility – all drove our decision to exit.
“We are delighted we acted so quickly to get our clients’ money out of the funds – and if we hadn’t the money would be locked in many or face huge penalties to get out.” This is not the first time Equilibrium has made the right call regarding commercial property. Just before the credit crunch, they started to reduce property in 2007 and managed to sell almost all clients’ holdings before the funds were locked.
Since the referendum, Equilibrium has raised the investment in bond funds, in particular in index-linked bonds which will perform well if sterling weakness persists, driving up the costs of imported goods and thereby pushing up inflation. Since purchase, the index-linked bond fund has risen by nearly 10 per cent. Colin adds: “Periods of political uncertainty bring with them both dangers and opportunities, so moving forwards we will continue to act quickly and diligently to protect funds from sharp drops and to maximise returns for clients.”