EUBankers.net: How will 'Black swan' events and interest rate changes affect investors?

12 December 2016

Ahead of the UK interest rate decision (15th December), Ausaf Abbas, non-executive director of Multrees Investor Services, answers the question: how will this year's 'black swan' events and changes to interest rates affect investors?

For the past few years investment experts have been suggesting that we are at an inflection point for interest rates, but they have been consistently wrong. So, the question is, if they call it again in 2017, as they are beginning to do, why should investors believe them? Of course, Trump and what happens in the US, plus Brexit, will be critical in determining how rates react so the levels of uncertainty are huge.

The vote for Brexit and the election of Trump are surprise events. If you had bet f 1 on the UK leaving the EU, Trump becoming president and Leicester City winning the Premier League at the start of 2016, you would have made an enormous amount of money.

Events with expected remote probability seem to occur with surprising frequency, so wealth managers must react quickly and think about how these black swan events will impact investment. We are seeing clients changing their tactical asset allocation in response to these extraneous events, and we have to provide them with the support to implement their decisions quickly and efficiently.