Another day, another dramatic turn of events in the unfolding Greek debt crisis. Are managers worried yet? This week marked a new step in the crisis, with Greece defaulting on its IMF debt, and a referendum on an EU bailout looming.
Last week fund managers and advisers said we shouldn't be concerned about the potential or ramifications of a Greek exit. Do they still feel the same way?
Stephen Macklow-Smith, manager of JPMorgan European Investment Trust (JETG), said last week: "We do not think Greece will be leaving the eurozone." This week he said: "I think I was as surprised by (Greek prime minister) Mr Tsipras calling a referendum as the negotiators in Brussels were and a lot depends on the question that's asked but don't think anything has changed in the attitude of Greeks towards membership of the euro.
"If the Greeks do perceive it as a referendum on their membership of the eurozone then we would expect, in light of what the polls indicate, a majority would vote in favour of an accommodation with the creditors."
He also said markets should not be, and were not, worried about the contagion impact of a Greek default. He pointed to the decrease in the size of Greek credit default swaps and the much smaller ownership of Greek debt by foreign banks and institutions than in the run-up to the last Greek crisis in 2012.
Ben Seager-Scott, director of investment strategy at Tilney Bestinvest, also remained sanguine. He said: "The key issues will be around keeping the banks open. Liquidity and banks staying open is key and we could see volatility - economic fundamentals and market sentiment are very different things."
Mr Macklow-Smith said: "There was an initial mark down in Italian debt and mark up of German debt (on Monday morning) but those spreads narrowed by 50 basis points in just two hours. Elsewhere equities initially sold off and have rallied, the euro initially sold off and has rallied and in general it looks as though markets are taking this in their stride."
Tom Stevenson, investment director at Fidelity Personal Investing, says investors should remain calm but keep diversified. "Greece's economy is small in European terms and even smaller from a global perspective. It does not really move the dial from a purely economic perspective.
"Investors have also had plenty of time to prepare themselves for this eventuality. This means that almost no Greek debt is held outside the official creditors. Private lenders have almost no exposure to Greek bonds. Equity investors, too, won't have been caught short by the slow unfolding of this drama. If they didn't want to hold Greek shares they will have got rid of them long ago."
However, Stephanie Flanders, chief market strategist for Europe at JPMorgan Asset Management, did issue a note of caution. She said: "The long-term damage of a torrid Greek exit could be very significant indeed - politically and financially. The risk premium on eurozone assets, in times of trouble, will be that much higher, and the room for manoeuvre in handling future crises will be that much smaller. These costs are incalculable, but that hardly means they can be ignored.
"The second, more obvious point to make is that Grexit is not yet what Greece is facing," she said, adding that though a vote against the plan of agreement seems unlikely, "European policy makers will need to decide very quickly what a 'yes' vote signals to them".
All are also agreed that one group who could suffer significantly as a result is the Syriza party. With a mandate to renegotiate Greek debt, managers agree that the Syriza party's credibility and future could be significantly damaged by the weekend's vote. Mr Macklow-Smith said: "If you roll right back to what Syriza said when they came to power, they said they could achieve debt relief, prevent further cuts and remain in the eurozone and have now had to accept they cannot do all three."
From here, the key dates to keep in mind for Greece are 5 July, when the referendum will be put to the Greek public and the 20 July repayment deadline for maturing ECB bonds looms.
