The Coronavirus crisis is constantly evolving, and Governments globally are updating their advice regularly on both medical and economic fronts.
On the health front, tragically there has been loss of life around, with this forecast to increase, but in China where this originated, they are seeing less new cases, which gives some hope.
Economically, Governments are stepping in to provide help, with the UK being the latest to unveil a £350bn lifeline for the economy to help businesses and individuals. The US have a $2 trillion stimulus package. These are big figures and the approaches being taken are unheard of. Governments are also cutting interest rates, with the UK base rate now at a historic low of 0.1% and the US Federal Reserve targeting 0% to 0.25%, with quantitative easing.
In the mix we’ve also had Saudi Arabia and Russia disagreeing over the oil price which has added another layer of financial instability.
Coupled with this uncertainty, Governments are prioritising health over economic concerns (i.e. restriction of movement) and the markets have fallen quite considerably. Prior to this the markets had been relatively buoyant mid- to end-February.
We want to reassure clients we’re not resting on our laurels and at times like this we rely on basic investment principles such as the adoption of a diversified approach – this includes cash, fixed interest instruments (gilts and corporate bonds), a spread across geographical areas and a spread over funds. Basic principles also state not to react to changes with a kneejerk response. Trying to time markets is nigh on impossible, as is trying to make asset allocation changes amid volatility.
Investments are typically concerned with the medium to longer term and within that period there will always be fluctuations – we need to focus on the bigger picture at present.
Our view is that there will likely be a market rebound when some form of normality returns and it’s worth remembering that over the last 20 years, 6 of the best days occurred within 2 weeks of the worst 10 days. Therefore, for the majority it pays to stay invested rather than cashing out.
If you have any queries or concerns about your investments, please don’t hesitate to get in touch to discuss them further with us.
You can contact us on 01383 721421 or email firstname.lastname@example.org