Coronavirus - Update 3 April 2020

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Coronavirus - Update 3 April 2020

We are getting so much information about the economy, the global effect and the likely outcomes that we thought we would share some of this information with our clients.  The markets across the world have been impacted over the last 4 weeks as this unprecedented virus has taken hold.  Governments and banks have responded financially and humanely, the only caveat we would put to any information is that these are totally uncharted and unpredictable times which are dictated by the virus.

Fund managers are monitoring the situation on a daily basis and think that once we are clear of the virus, in the not too distant future we will initially see the global recession (short lived) followed by a recovery in the latter half of this year and a strong recovery in 2021.  We are in what we call a Bear Market (a market in which share prices are falling, encouraging selling), of which there have been 8 out of 120 markets,  Bear Markets tend to be short lived.  Although this is a concerning time, we recommend remaining invested as time in the market is always a longer-term benefit than timing the market.  The funds that we have clients invested in are on average down 10 – 12 % (some of this will vary depending on individual risk profiles) as opposed to the markets which are down 35%.  This reinforces what we always advise the clients that funds do react to market downturns but don’t follow completely due to their diversity.

If you were to compare fund values this time last year to now there is little difference in their values, therefore the impact on a medium to long term basis is lessened. The advice is to do nothing at present.  We acknowledge that these are concerning times, but we do believe that the markets and the economies will recover and that fund managers are seeking opportunities that inevitably present themselves in the markets now.  Clearly we can expect market volatility to continue whilst we are in this situation.

If you have any concerns, please don't hesitate to give your adviser a call.

Stay safe, keep healthy and look after each other!

Vanguard Bull and Bear Markets - April 2020
Vanguard Bull and Bear Markets - April 2020