The rapid spread of COVID-19 has triggered a wave of risk-off sentiment around the world which has resulted in a large spike in volatility. Global markets are currently experiencing their steepest falls since the 2008 financial crisis and many have now entered bear market territory.
As a consequence, some clients may find that their investment portfolios have dropped in value by over 10% during the current reporting period (6th January 2020 to 5th April 2020).
In our view the government’s response to the outbreak has been absolutely correct. The strategy of trying to control the rate of spread of the virus over an 8-10 week period will make it more manageable for public services. Whilst it may be true that the virus will be with us for some time, unless it fades with warm weather, we should get used to a flattening of cases in the nearer term.
That having been said it is important to remember that portfolios are invested with a long term investment approach and it is extremely wise to avoid panic and knee jerk reactions to current conditions which will, ultimately, be temporary. Our investment team is currently in the process of reviewing managed portfolios in order to take advantage of the incredible opportunities now available with markets at these low levels. This market downturn is very different from the extreme risk that was experienced during the financial crisis and, although it may be hard to see in the short term, there will be better days.
If you have any queries or require further information please do not hesitate to contact our customer services team or your investment manager.