Welcome to my new series of financial updates, which I hope will provide you with helpful information in order to try and steer you through what are unbelievably strange and worrying times for all of us. My intention, is to provide you with regular, if not daily updates on events and links to relevant information.
Many of my clients are invested within more cautious portfolios and products and so are only impacted by falling sharemarkets (or rising ones!) in a relatively small way. However, what makes this current ‘crisis’ unusual, is that all investment sectors have recently been affected by a decline of some sort or other, not primarily due to financially fundamental reasons, but due to the fear of where we, as a global economy, may end our journey with Covid19 Coronavirus.
What I can say, is that financial markets tend to factor in ‘worst case’ scenarios at a very early stage, usually well in advance of the actual impact of a situation, as we saw in the 2008-09 global recession. However, this situation is very different, because there is no accurate strategy in place whereby anyone can reasonably predict the outcome, not only for public health but also for economies, businesses and more importantly, governments and nations and this is why we have seen such a large adjustment take place within many asset sectors generally and why investment markets continue to be so uncertain. Hopefully the weeks ahead will help the UK to better navigate through not only the health consequences, but also the financial impact of the virus.
For balance, many of you may also remember the Beast from the East in 2017/18, which led to a flu and norovirus outbreak in the UK, but did you know that it also accounted for 50,000 excess deaths within the UK in its relatively short time? I didn’t.
Many analysts suggest that the reaction and downturn in values is extreme to say the least, but time will tell and we are very much in need of pro-active governance to ensure that the financial impact is lessened as much as possible. So far we have the promises, but we are yet to take delivery of the goods. Hopefully these will follow on much sooner than predicted!
We are about to enter a period of lockdown, not just for the wider public, but also for many, many businesses and so the government needs to work quickly in order to deliver the financial stimulus packages it has promised; so far it has been found wanting on this with, for example, self-employed people being advised that funds will not be available for them until at least June (and there is not indication that these will be backdated!). For employees, payments will be backdated, but their employers must continue to pick up the wages bill until at least the end of April, that will not be an easy task for many businesses whose income stream has now stopped and, in my view this is unacceptable when we compare our offering alongside the aid packages already in payment in countries like Denmark and New Zealand (yes, they have a population an eighth the size of ours, but decisions were not just made within hours, but actually implemented within days).
On a positive note however, we have moved through a fundamentally worse financial crisis in 2008-09 and emerged very quickly and positively from this and as investors, whether in low-risk or high-risk investments, history has shown that it is not a case of if the values recover, but more a case of when.
Many of you may be invested through the likes of the Prufund with Prudential, which has proved to be a tremendously reliable fund for so many years, but even this fund has not been immune from some adjustment to its value as result of the turmoil. However, I can assure you that the Prufund team are working on appropriate updates for the fund and when these are to hand, I will of course publish them on here.
In terms of investment products and providers in general, we are currently experiencing problems with regard to servicing issues, ranging from information requests, to investment surrenders and changes within investment funds; this is due to the fact that a lot of company employees are now working remotely and there are just not the numbers of servicing staff available on-site to carry out requests as promptly as usual. It is not abnormal to see a 30-day turnaround for even the most straightforward tasks presently, I’m afraid.
I will endeavour to find links to articles which I hope will be helpful and, of course, I am here to assist everyone that has any concerns about their investment funds. If you have any questions then please call me on 01724 735121, or if you would prefer to e-mail them to me, my e-mail address is steve@jenkinsfinancial.co.uk.
I will post some of the questions and answers on my future blogs, where I think they may be helpful for a wider audience.
In the meantime however, please look after yourselves and your loved ones; we will hopefully all come through this together in the coming weeks, if we all play by the rules and then we can get return to whatever normal looks like for each of us going forward!
Links to helpful articles:
https://www.quilterinvestors.com/siteassets/documents/corporate/investing-through-volatile-times.pdf
https://www.fidelity.co.uk/markets-insights/daily-insight/seven-steps-investing-through-crisis/