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Article 50: No change to Vanguard's mission

29 March 2017 | Markets and Economy

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Commentary by Richard Withers, head of government relations for Vanguard in Europe.

Richard WithersThe United Kingdom's departure from the European Union has reached an important milestone, as Prime Minister Theresa May has triggered Article 50 of the Treaty of Lisbon.

By invoking Article 50, Mrs May has formally notified the EU of the UK's decision to leave. This begins the process of negotiating the terms under which the UK will withdraw. Alongside the departure process, the government will also now begin to negotiate the UK's relationship with its European partners. The outcome of these negotiations will have a big influence on the long-term economic outlook for both the UK and the EU.

So what happens next and what does it mean for your clients?

Uncertainty remains

The negotiations that will now get under way will be long and complex. It's likely to take at least two years – and possibly considerably longer – to complete the process of leaving the EU and negotiating future trade deals. During that period we expect to see plenty of speculation, and you will probably get lots of questions from your clients, but actionable facts may be slow to emerge.

What should investors do?

At Vanguard, as you would expect, we are tuning out the speculation and focusing on the facts – and we recommend a similar approach for investors.

As the negotiations unfold, the volume of the noise around Article 50 will rise and fall and this may cause periods of market volatility. Meanwhile, the long-term economic impact is still uncertain and will remain so for a considerable time.

Rather than trying to guess the future or react to short-term news, we believe investors will be best-served by remembering their goals, tuning out the noise and sticking to their plans.

That's where professional financial advisers come in. Left to their own devices, your clients may be tempted to change their asset allocations based on short-term news. However, advisers can add value by helping investors avoid this behavioural pitfall and remain focused on their long-term goals.

Committed to advisers and their clients

We don't yet know what the UK's relationship with the EU will look like in the future, but we do know that we remain committed to improving UK investors' chances of success. We plan to do this by continuing to offer high-quality, low-cost funds combined with value-added research and commentary.

Thanks for supporting Vanguard. We're here for the long term; we want to help you build a successful business and we're determined to help your clients reach their investing goals.

Important Information:

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance is not a reliable indicator of future results.

This article is designed for use by, and is directed only at, persons resident in the UK.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

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