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COVID-19 & your investments


A friend of mine who is the head of Sales at a UK national office supply company tells me that they sold 30,000 bottles in two days two weeks ago and are on back order with the manufacturer. Zoom shares are, well, zooming, as meetings are cancelled and people work remotely. Online gambling sites are preparing for increases in activity as people self-isolate and get bored with Netflix box-sets.

On the other hand, in a surprise move on March 3rd, the Federal Reserve in the USA dropped their target range for federal funds by 0.50% to 1.00%-1.25%. Indeed most commentators expect COVID-19 to have a significant negative impact on the world economy. That seems to have been born out by dramatic falls in stockmarkets last Monday (also heavily influenced by the drop in oil prices).

However, Nigel Wilson, the boss at Legal & General makes a compelling case for savers to invest determinedly for the future pointing out that “Our business is really based on long-term macro-economic trends. People save for their pension over 20, 30, 40, even 50 years and people have to save more for that. There’ll be ups and downs in the stock market many times over the next 20 or 30 years, and that’s not what we get obsessed about. What we want to do is invest more in the UK and get people to save more for their pensions.”

Of course, he would say that wouldn’t he? But he’s right, there will be ups and downs but investing for the long term whilst diversifying carefully is always the best strategy – even when faced with a possible pandemic.

We’ve been examining the performance of your portfolios over recent days. The headline observations are that:

  1. Portfolios have behaved pretty much as we would expect. Higher risk portfolios have seen a fall in value, lower risk portfolios have too – but less so;
  2. The impact and ethical portfolios in which many of you invest have held their value better than others – primarily because they don’t invest in oil and have escaped the effect of the sell-off in that sector;
  3. Wendy (who produces your portfolio valuations) emailed me happily last week to say, “FTSE down 10%+ this week – my Portfolio (40% Hybrid Ethical) only down 0.92%”. So she’s enjoying the benefit of a lower risk, ethical, long-term portfolio (we believe in our products)!

At times of crisis and anxiety, the investment philosophy which guides your investment portfolios comes into its own. A long-range perspective and thorough diversification protect you from the worst effects of investment markets’ volatility. This means that we can turn our attention to the important matter of looking after the health of those around us and ourselves.


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