The Brexit process has undoubtedly promoted great amount of economic and political uncertainty, which has been priced into the markets as of late. Alternatively, you may have heard warnings of a more widespread recession on the horizon, in an atmosphere dominated by talk of trade war and emerging market slowdown. From a weakening pound to a new government, many have been left wondering about their personal investment strategy and whether it can stand up to the economic volatility that could occur over the coming months. In any case, from a soft Brexit to no deal at all, the move is likely to have significant structural effects on the UK economy.
Here at Yielders, we take our investors’ concerns very seriously, which is why we would like to explain the nuances in our model that help us to mitigate some of the risks posed by Brexit:
1. Regardless of any volatility in terms of economic growth and house prices, investors can be assured that there is no chance of falling into negative equity. As our platform is free of any debt or leverage whatsoever, our assets are not at the mercy of the banks. As a shareholder in the asset, you can be assured that your equity is 100% assured in any economic climate.
2. Additionally, avoiding leverage means that we can give you, the investor, direct control over the asset. In the case that a satisfactory sale price cannot be achieved on behalf of the investors, shareholders can vote to continue renting the asset out, thereby extending the rental period until a more favourable exit can be achieved.
3. Each asset is held in an SPV (limited company) structure meaning that the performance of Yielders is not tied to that of the assets in any way. We are confident of our model as a company and have taken steps to ensure its resilience, however we believe this separation adds another layer of confidence for our investors.
4. Focussing on house price volatility, it is ultimately very difficult to predict what is going to happen, and we have seen varied outcomes projected by our data providers. Nonetheless, we attempt to mitigate risk in this area by targeting assets with endogenous demand – purpose-built assets in sectors such as student accommodation, for which we expect demand to remain consistent throughout the Brexit process
5. If you are investing from abroad and converting your domestic currency to invest with us, you are in fact benefiting from Brexit already! The significant weakening of the Pound has increased the purchasing power of many currencies, making investment in the UK increasingly better value for money.
Ultimately, the outcome of the negotiations and elections to come will define the UK economy’s performance for the foreseeable future. However, here at Yielders we feel it important to assure investors, both of the control that our model allows investors over their assets, and also of the work that we do to mitigate against risks posed by adverse macroeconomic conditions.