- Wednesday 26 February 2020
You are no doubt well aware of the current fears over the Coronavirus ‘pandemic’ and may have heard of the impact on Global Equity Markets. As investment managers, our job is to assess potential risks to our clients money and take appropriate action as we feel is necessary. Considering the ongoing news cycle and associated drop in investment performance this week, you would be right to ask what we intend to do about it.
Our recommended approach is as follows;
- Wait out this short term market-selloff and maintain regularly scheduled portfolio rebalancing to maximise returns
REASONS
- Markets always react to major global events, especially in more recent times with saturated media coverage, by significant short-term (< 1 week) selling, which leads to a marked drop in value.
- Inevitably there is a quick ‘bounce’ as opportunists use this to enter the market, buying funds at a cheaper price.
- Sometimes there can be more volatility over the following months but that is where a sensible rebalancing schedule reduces investor exposure.
MOST IMPORTANTLY - FOR OUR INVESTORS
- Our Investment Portfolios have been built within the framework of our clients Personal Financial Goals and/or Risk Profile
- This means that we have factored in the volatility of equity markets and are comfortable that;
- Our clients have more than enough time to see out this volatility, OR
- If they do need to take money from their portfolio, there are other assets (government bonds, cash & alternatives etc.) that are available to do so.
WHAT WE KNOW
This is not the first instance of ‘Global Events’ impacting the markets. It happens on a regular basis and, while scary at the time, we do know the following:
- It’s impossible to know in advance when markets are going to fall.
- The only certainty is that if you exit when they do, you have cemented this fall and have no chance of recovery.
- Time is the solution to all investment volatility
Contact Us if you have any questions around your investment portfolio.
