How Does Coronavirus Affect Your Investments?

19 March 2020

You may have read widely in the media about how Coronavirus has affected the stock markets across the world. With a rapidly changing situation there has been widespread volatility in the FTSE100 causing recent falls in the market value of stocks and shares.

However, it is not all doom and gloom in the markets.  The performance of investment portfolios does not always follow the same path as the FTSE100 index. As you can see from the graph below, even though the HSBC FTSE 100 index has dropped by 32.92% since the beginning of January 2020, a typical Old Mutual Wealth Wealthselect Portfolio with an average risk rating (5) has dropped by just -13.79%. This is the benefit of having well diversified funds across the main asset classes to shield you from falls in any one sector.

This type of stock market activity has been witnessed many times before. Good examples are as follows:

April 2011 Fukushima Earthquake
October 2011 Ongoing European debt crisis
July 2015 Greek debt crisis
Late 2018 Market correction, including Red October

Although these events were worrying at the time, each time the market has recovered well and the event was just a short term blip.

We suggest that unless you need your capital within the next 6-12 months that you sit tight and let the markets recover which they will even if you see further stock market falls. If you do consider moving to cash, you will risk missing the market when it starts to rise as the timing of this may be unpredictable.

We naturally understand the concern that these events cause. We are happy to discuss any concerns that you may have concerning your investment portfolio. Throughout these unpredictable times, our office will remain open as normal and we are offering our clients the chance to discuss their portfolio over the phone, email or by video calls. Please feel free to call Simon Harnaman or Pete McBride on 0117 907 1965 or by email should you have any concerns.