Political events can have a significant impact on markets. But should they influence your investment decisions?
Looking back at the UK’s Brexit vote to leave the European Union offers an interesting case study in how politics and investing can intersect, and why long-term investors need to keep a cool head.
Looking back at the UK’s Brexit vote to leave the European Union offers an interesting case study in how politics and investing can intersect, and why long-term investors need to keep a cool head.
How have stock markets performed since Brexit?
The good news is that the FTSE 100 has risen around 139% since the UK voted for an EU exit in the referendum on 23 June 2016. Unfortunately, some global indices have fared much better. The MSCI World index is up 272% and in the US, the S&P 500 is up almost 300% over the same period*.
The performance of investment funds
How about investment funds? The average fund in the UK All Companies sector has risen almost 91% since the referendum vote*. Of course, individual fund performances have varied. While the best have delivered returns of more than 200% during this period, some have lost money. In comparison, the average fund in the Europe excluding UK sector has returned 157%, with the standout performers achieving more than 300%. Even the worst are up around 35%*.
The Brexit period also highlights why many investors choose to spread their money across different regions rather than concentrating on a single market. No one could have predicted exactly how events would unfold in 2016, but investors with globally diversified portfolios were less reliant on the fortunes of any one country.
UK funds are less popular
There’s no doubt that UK equities are less in demand. Despite initially enjoying inflows, the UK All Companies sector has suffered considerable outflows over the past eight years. In June 2018, UK investors had £181.9 billion in this area, according to our analysis of Investment Association data. In March 2026, the figure is £145 billion, representing a 20% fall. Consequently, the sector is no longer the most popular with UK investors. That honour goes to the Global sector, in which assets under management have more than doubled to £228.9 billion**.
Conclusions from Brexit
The UK entered 2016 facing headwinds, including capital rotating towards US growth markets, according to Morningstar:
COVID, global inflation, geopolitical conflicts, weaker goods exports and domestic policy missteps “further eroded” these confidence levels. However, it’s not all bad. “Since 2022, UK equities have outperformed US and global markets, driven by a strong value rotation and resilient dividends,” they added.
Does politics affect investments?
Political decisions can certainly influence investment returns, although their impact is often difficult to predict and can vary considerably between sectors, regions and companies. Decisions made in the corridors of power affect both individual companies and the economic backdrop. Changes in taxation, spending and regulations all have an impact. Stock markets also get spooked by political instability or currency changes. Then there are the geopolitical problems. We have seen this recently with oil prices spiking due to the conflict between the United States and Iran.
What investors can learn from Brexit?
Brexit demonstrates how difficult it can be to make investment decisions based on political events. In 2016, few people could have accurately predicted how markets would react over the following decade. Rather than trying to forecast political outcomes, many successful investors focus on building diversified portfolios that can withstand different economic and political environments.
How to choose your investments
Finding the right fund can be challenging. Thousands are available to UK investors, each with different objectives, styles and risk levels. That’s why many investors use independent research, such as FundCalibre, to help narrow the field and identify managers with strong long-term records.
Trusted funds are given an Elite Rating. Typically, this is awarded to no more than 10% of funds in any sector. The rationale is simply: the fund is good enough, or it’s not.
Fund suggestions
If Brexit has highlighted the importance of diversification, investors may wish to consider funds with different geographical focuses. The following examples show how investors can gain exposure to the UK, Europe and global markets.
Artemis UK Select
Equity
Artemis UK Select
Ed Leggett and Ambrose Faulks are the managers of this high-conviction, multi-cap, UK equity fund. It invests in a relatively concentrated portfolio of 40-50 holdings, which currently include household names such as Barclays, Marks & Spencer Group and Rolls-Royce Holdings***. The fund’s ability to short stocks – profiting when the share price falls – sets it apart from many rivals within this sector. We believe this fund is suitable for investors seeking the potential for high rewards but willing to accept greater volatility.
Liontrust Special Situations
Equity
Liontrust Special Situations
This best ideas portfolio has been a strong performer and can invest in any UK company, regardless of its size or sector. We believe it’s one of the best options for investors wanting high-conviction, multi-cap exposure to the UK stock market. Its investment philosophy is based around finding companies with strengths that can include intellectual property, a strong distribution network and recurring revenues. Currently, just over 40% of its assets are in FTSE 100 names, with almost 28% in the FTSE 250 and around 20% in the FTSE AIM***.
Janus Henderson European Focus
Equity
Janus Henderson European Focus
Investors who still want exposure to Europe could find this diversified portfolio of 30-40 stocks interesting as it’s driven by sector themes and stock-specific dynamics. The fund, which is run by Marc Schartz and Robert Schramm-Fuchs, blends blue-chip holdings with mid-cap stocks in its pursuit of alpha. It also has broad geographic exposure, including France, Switzerland, the Netherlands, Spain, Germany and Sweden. Industrials and financials are among its key sectors***. Their investment process involves considering the macroeconomic environment and industry trends. We like the fact that they can invest early in stocks – and with decent conviction.
CT Global Focus
Equity
CT Global Focus
How about if you’re on the fence about Brexit – and want exposure to the UK and Europe? Well, this fund could be the answer as it invests across the world. Co-managers David Dudding and Alex Lee invest in high-quality, high-return-on-capital businesses that can compound over the long term. Its holdings, which currently include NVIDIA, Mastercard and Alphabet***, the parent company of Google, are selected based on fundamental research. They can even venture into emerging markets, traditionally regarded as riskier, but only when businesses meet their strict quality criteria.
Final takeaway
Brexit remains one of the most significant political events in recent UK history. While it undoubtedly influenced investment returns, it also reinforces several timeless investing principles: diversify your portfolio, avoid making decisions based on headlines, and focus on your long-term goals. Political events come and go, but a well-constructed investment strategy should be able to navigate a wide range of outcomes.
*Source: FE Analytics, total returns in pounds sterling, 23 June 2016 to 29 May 2026
**Source: Investment Association, full figures at March 2026
***Source: fund factsheet, 30 April 2026
This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.
Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.
Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.
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