Baptist Analysts React to UK’s ‘Brexit’ Vote

Image: iStock
Image: iStock

Though the United Kingdom’s vote yesterday (June 23) to leave the European Union took many political observers by surprise, leaders at GuideStone Financial Resources and the Southern Baptist Foundation say they’ve had the referendum in view for months and have taken steps to protect Southern Baptist investors from the resultant market volatility.

Meanwhile, Christian commentators on both sides of the Atlantic have weighed in on the “Brexit” — as Britain’s E.U. exit has been dubbed — with opinions divided and calls for believers to help bring unity to the U.K.

Thursday’s referendum yielded a 52-percent majority favoring an E.U. exit, various media outlets reported. British Prime Minister David Cameron, who argued strongly the U.K. should remain in the E.U., resigned today (June 24), saying, “I do not think I can be the captain to take the country to its next destination,” The Telegraph reported. A full exit from the 28-nation coalition could take up to two years.

The election results led the world’s stock markets to lose a combined $2 trillion in value Friday, Reuters reported.

David Spika, GuideStone Capital Management global investment strategist, told Baptist Press Southern Baptist retirement investors should not adjust their portfolios in response to the market drops.

“Right now the absolute best thing to do is just be patient and let the dust settle,” Spika said. “There are too many things that are unknown. You never want to react to short-term volatility as a result of uncertainty. That’s the worst course of action.”

Markets “weakened somewhat” in early June, Spika explained, “on fears that the leave vote would prevail” and Europe’s economy would experience added instability. Earlier this week, markets rallied when polls indicated the remain side had pulled ahead. The unexpected election outcome then led to a drop.

Long-term economic results of the Brexit vote are uncertain, Spika said, and diversification of GuideStone’s funds minimizes the effect any long-term downturn would have on retirement accounts.

The Brexit “has been something we’ve been discussing,” Spika said. But “there really wasn’t anything that we felt like we needed to do to ‘protect’ our retirement investors because we knew … the impact on the U.S. economy would likely be negligible.

“We assumed there would be some volatility, but we knew that long-term investors [like] our retirement investors — as long as they stayed patient and stayed the course — they would be able to ride through the volatility. In fact, because the U.S. economy remains on solid footing, we see this as a buying opportunity at some point for U.S. investors buying U.S.-denominated asset classes,” Spika said, noting U.S. market downturns likely will reverse in the coming weeks.

Spika emphasized, however, that GuideStone “adds value” to retirement accounts primarily by utilizing skilled managers and diverse portfolios, not by “trying to time the market.”

Jim Mooney, vice president of investments at the Southern Baptist Foundation, told BP the U.K.’s impending vote played a role in SBF’s decision to continue a three-year practice of avoiding international stocks. Initially, “weakness in certain E.U. countries” was the key reason for the strategy, but a potential Brexit “has been one of the factors” considered for the past six months.

Of the approximately $500 million the Foundation manages in funds from individuals and organizations to benefit Southern Baptist causes, “our international exposure has been less than 1 percent and European exposure is less than one half of one percent,” Mooney said.

With estate gifts, Southern Baptist Convention entity endowments, church building funds, state convention agency funds and the like comprising SBF holdings, “we want to tilt on the conservative side to preserve that,” Mooney said, “because we feel like maintaining and not losing on a permanent basis any of that principal ensures that the funds are there to grow, even at a modest rate, to fund whatever cause has been designated.”

He added, “We view it as God’s money,” earmarked “for Kingdom work.”

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SOURCE: Baptist Press
David Roach