Coronavirus (COVID-19) Market Update March 2020
As you will have seen across the media, the combination of Coronavirus and various other events has affected the global economy and global stock markets in 2020. We felt it was a good time to give you an update on our thoughts on the current situation currently and going forward.
We have been talking about the potential for a market correction for some time now, with 2019 marking the longest bull run in US markets since records began.
Periods of stock market decline are notoriously difficult to predict, so much so that we would suggest that no one in the world can predict this accurately and consistently. What is important to remember is that Markets go up and down and is part and parcel of investing for the long term. Knowing the markets work in this way is important and helps assist in keeping a cool head in times of panic.
The phrase to remember is: its time in the markets not timing the market.
It can be tempting for investors to try and time the market by buying and selling at the top and bottom, but invariably emotion pushes us to do this at the exact wrong times. Particularly, selling when the market has dropped significantly, and buying when it is at its peak. Our research shows that staying invested for the long term can be the most beneficial course, and lead to better returns.
For example, looking at the last 15 years in the UK stock market, staying fully invested could have earned you a 7.6% return per annum, missing just the top 10 days cuts this down to 3.3% per annum:
Nick Kirrage, a fund manager at Schroders, said: “You would have been a pretty unlucky investor to have missed the best days in years of investing, but the figures make a point: trying to time the market can be very, very costly.
“As investors we are often too emotional about the decisions we make: when markets dive, too many investors panic and sell; when shares have had a good spell, too many investors go on a buying spree.
“At times over the last three decades you would have to have had nerves of steel as an investor.
“They have included some monumental stock market crashes including Black Monday in 1987, the bursting of the dotcom bubble at the turn of millennium and the financial crisis in 2008, to name but three.
“The irony is that historically many of the stock market’s best periods have tended to follow some of the worst days.
“It’s important to have a plan of how long you plan to stay invested, with that plan matching the goals of what you’re trying to achieve, be it money for retirement or your children’s university education. Then it's just a matter of sticking to it - don't let unchecked emotions derail your plans."
This comes back to how we at Aventur Wealth manage investments and assess this over the long term. We put an initial plan into place and reassess this periodically as we go along. Some of the investments we hold and the providers we use may change over time, but as long as a plan is in place, we can work towards your goals whatever they may be. The cashflow plans we put in place for our clients actually assume a recession approximately every 10 years, this means that the events we are currently going through have already been factored into the plans put in place.
As for an update on the Aventur Model portfolios that we operate, these continue to perform well when compared to the average IFA portfolio and big discretionary fund manager portfolios. For example, the average IFA Cautious portfolio has fallen more than the Aventur Medium risk portfolio (AV3). On average our portfolios capture less of the downside and more of the upside, which is exactly our aim over the long term.
If you want to talk more about your investments then please do not hesitate to contact your Financial Adviser.
Business as Usual
We know that these are uncertain times and we have all seen that a lot can change in a few days. And as such, we at Aventur Wealth want to reassure you that we are committed to ensuring the safety of our clients, advisers and employees, and are taking steps to ensure we remain up to date with any government advice.
As a company, Aventur Wealth is operating as business as usual and will continue to do so unless advised otherwise by the government. We generally operate as a paperless and cloud-based business, so communications and service should remain unaffected, however we thank you for your patience and understanding at this time should you experience any delay in a response from us.
To align with current government guidance, all Aventur Wealth advisers will immediately stop all face-to-face meetings, and these will either be postponed or replaced with Skype or telephone conversations. Email will remain our primary source of contact throughout this period.
If you have any queries or concerns please do not hesitate to contact us.
Managing Director & Head of Aventur Investment Committee