Ahead of the Brexit referendum on 23 June, James Butterfill, Head of Research and Investment Strategy at ETF Securities comments: “Most investors believe that the greatest short-term impact - of fear of Brexit rather than Brexit itself - will be on sterling and consequently we have seen a big rise in short positions in our short-GBP ETFs. As we believe that Brexit is unlikely we see this as a buying opportunity for long-GBP.

“While we have not heard of clients actively adapting their portfolios we have seen them planning from a risk perspective and part of this has been to purchase short-GBP as a form of hedging. Many clients were already underweight UK equities due to continued malaise in the commodity and financial sectors as the FTSE 100 comprises almost 55% of these sectors alone.

“The main conversations that investors are having regarding the upcoming Brexit referendum are related to the divergence between the online polling and telephone polling, the bookies and regional/demographic biases in the polling data. Most see that when the pollsters provide a “don’t know” response most of those individuals have historically voted for the status quo, when polls are adjusted for this the gap is much wider than the polls say. There is a belief that bookies tend to be a closer representation of the public’s views and that pollsters often have regional and demographic biases that were revealed in the election last year.

“The biggest concern we’re seeing amongst investors is the passporting of their funds throughout Europe after a potential brexit and the risk of it creating wider financial contagion. At the moment, surveys have highlighted that brexit is their top concern, above that of a China hard landing or a Greek default.”