Harinder Hundle likes to be near the eye of the storm. Brexit has spurred financial giants such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. to plan moving some U.K. jobs abroad, but the former investment banker is staying put in London. Hundle, 42, who goes by “Hari,” recently became managing partner at the London branch of Twin Focus Capital Partners LLC, a Boston-based multifamily office. The unit, nestled among luxury shops in Mayfair, opened its doors in October, a month after Hundle joined TwinFocus. He’d previously spent two years overseeing about 1 billion pounds ($1.27 billion) in a single-family office for the principals of a U.K. insurance company. Britain’s looming departure from the European Union has thrown up a number of risks, ranging from a no-deal, crash-out Brexit to the possibility of an election ushering in a leftist government. In an interview with Bloomberg Markets, Hundle outlines how he thinks the super rich can prepare for whatever happens—and even “take advantage when the time is right.”
BEN STUPPLES: What’s your investment strategy for the U.K.?
HARI HUNDLE: One needs to be cautious. We’re underinvested in the U.K. because of Brexit and the political risk out there of a left-wing Labour government led by Jeremy Corbyn. Over the long term, the U.K. is fine; short term, there are some real challenges out there. We want to take advantage of volatility when it presents itself, and we’re comfortable coming in, but I don’t think that time is right now.
BS: What worries you more: Brexit or a Labour government?
HH: Brexit and Jeremy Corbyn are completely intertwined issues. We have very senior members of the Labour Party who are very left-wing, wanting the governing Conservative Party to bring a bad deal to the U.K., as that’s their inroad to power. The probability of Brexit negotiations going wrong and a Labour-led government, which would be the most left-wing government in Europe today, is quite scary. I don’t think people are giving this matter enough thought. Generally, the market is mispricing risks here. Brexit has its own risks, and clearly a hard Brexit would be negative. But the political consequences of Corbyn are much greater over the short term and medium term. Anyone who has property wealth should be concerned, so this matter just doesn’t just affect the ultrahigh-net-worth community. People who’ve owned a house in the U.K. for the last 30 years are sitting on decent equity value, and I think Corbyn is probably going to come after it if he reaches political power.
BS: How can you protect your clients against these risks?
HH: The ultrahigh net worth community has the ability to be more flexible with its money. Clearly we have that option here at TwinFocus. Everything we’re doing today around these risks is ensuring that assets sit offshore in terms of their custody. Offshore transparency is good, and the U.K. has benefited a lot from offshore planning in a way that I don’t necessarily agree with. In this scenario, I mean using financial hubs like Luxembourg and Switzerland, where you can have the custodial relationships of assets offshore in a well-regulated, transparent environment. If you do that, the U.K. government can’t come after your assets overnight and tax you in some draconian way.
BS: Why open a London office amid all the turmoil in the U.K.?
HH: If there’s a hard Brexit, London will fight. You could get a situation where London decides what it does with its tax revenue. While you don’t know how far that idea goes, I will say this: London’s not going to go away. We can advise from here. We have some of the world’s best asset managers. We have so much culture and so many global businesses in this city. Luxembourg can’t replace London. Switzerland can’t either. Instead, they can provide a custodial infrastructure. There will be some damage to London with a hard Brexit, but the nature of global cities is they have ebbs and flows.
BS: How are you preparing for the Dec. 11 vote on Prime Minister Theresa May’s deal?
HH: We have funds to invest, but we’re certainly not looking to do anything at the moment. Between now and the vote, the U.K. is pretty much uninvestible. We know of some investors looking to take advantage of the volatility, but we’re just waiting on the sidelines.
This article was provided by Bloomberg News.
