As Brexit Uncertainty Mounts, Watch These ETFs

Fueling market uncertainty, the United Kingdom will vote for the so-called Brexit referendum on whether or not it will remain in the European Union, potentially precipitating wide-reaching volatility on global markets and exchange traded funds.

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Debate on the Brexit vote has heated up as we draw closer to the June 23 referendum date. While many have warned of the negative effects of a Brexit vote going through, rising number of Euro-sceptics are turning out in Great Britain, with a number of polls showing counts that are too close to call or even in favor of a break from the European Union - London newspaper The Independent

The Brexit is widely seen as a negative market catalyst. For instance, in a note, Richard Turnill, BlackRock Global Chief Investment Strategist, argued that the vote would likely send shocks through global markets, pressuring riskier assets like stocks and corporate credit, in the ensuing risk-off environment as concerns over political instability.

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Specifically, Turnill warned that peripheral European assets and global financials and materials equity sectors would be especially exposed. On the other hand safe-haven investments would benefit.

Eurozone officials have also issued a warnings about the economic consequences of a Brexit. The immediate threat comes from a weaker British pound sterling and a hit to economic activity as an exit would remove the country's favorable trade agreements - the EU enjoys free trade between member states, which makes exporting cheaper and easier for British companies. According to a May Markit/CIPS PMI survey of companies, over one-third of companies reveal that the uncertainty over the Brexit vote has contributed to a detrimental effect on their businesses.

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