Understanding why some investments have gone down and what we are doing to lessen the impact for investors
There have been three sources of uncertainty which have affected global equity prices over the past three years:
- As you know, at the start of the Covid-19 pandemic in 2020, nationwide lockdowns caused equity markets to fall, as much of the global economy was at a standstill
- Supply chain issues, have meant some key goods companies need have been less available as suppliers recover from the pandemic
- Inflation reaching its highest level in a generation has caused central banks to raise interest rates sharply, meaning an end to the there is no alternative (TINA) environment that had supported equity markets in the preceding years. Russia’s invasion of Ukraine exacerbated inflationary pressures, leading to rising global energy and food costs, as well as dampening investor confidence.
What your Investment Manager/Financial Planner can do for you
It’s important to stay invested to help you work towards your long-term financial goals, and that’s why your next step should be to speak to your Adviser or Investment Manager. This is because they factor in the current market environment for equities and take into account your investments going down in the short-term as part of their longer-term plan for your portfolio’s overall performance.
Here’s why some low-cost funds might be currently performing better than an investment portfolio
Sometimes passively managed funds, such as those that track an index, may perform better than actively managed portfolios over the short term.
Your Investment Manager/Financial Planner factors this in and will have a longer-term plan for your portfolio’s overall performance which takes account of the possibility for short-term underperformance. This plan may in fact include some investment into low-cost, passive funds. That’s why it’s important to establish a realistic time horizon with your investment manager, thinking about when you will need your investments - speak to your Investment Manager or Financial Planner to find out more.
Why having an Investment Manager/Financial Planner as your guide when markets are declining is important
As a firm, we believe that investment management really shows its worth when markets are in decline. Here are two key reasons why the expertise of a Quilter Cheviot Investment Manager/ Quilter Private Client Advisers Financial Planner will benefit you:
- You get active management - They will steer you through market volatility and explain the risks that affect your portfolio. This means that they can help you take advantage of the opportunities available as some asset prices become cheaper
- You get help to meet your goals - They will suggest the right solutions to better match your financial goals. This means you can take full account of the current market environment in pursuing your long-term investment objectives.
The value of investments can fall as well as rise. You might get back less than you invested. You should only consider these products if you are willing to take some risk with your capital. We will consider whether such products are suitable for you before recommending an investment.
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited 02/02/2023
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Understanding the Current Investment Landscape - Inflation
