Given the recent widely reported volatility that has swept through markets worldwide, I have asked Brian to prepare a summary of Conçerva’s investment approach in unstable and unpredictable markets which can be found below.
The main point I wish to personally stress is to remain calm as volatile markets can lead to unwise investment decisions.
Ian Bromley DipPFS
Managing Director
Coronavirus and Your Investments
At Conçerva, we utilise three key pillars to reduce the risks to your wealth in panic driven markets:
Market Diversification – Your wealth is not exclusively invested in FTSE 100 companies
We believe that the FTSE 100 index, the most quoted indicator by the mainstream media, does not constitute a balanced portfolio. It is overweight oil companies (who have been especially hit recently), banks, mining and “big pharma”, but has virtually no exposure to thriving tech companies like Microsoft. Since the 2016 referendum to the end of last year, the US stock market was up 65%, while the FTSE 100 was up just 21%. Your equity exposure is spread globally at Conçerva.
Asset Diversification – Your investments are spread across a number of financial assets in addition to equities
We hold government bonds in your portfolio to reduce the drawdown on your wealth when stock markets tumble. Consider the period from the last General Election to last Friday. A balanced 50/50 portfolio of Gilts and FT All Share company shares would have delivered a modest 1.3% return even though the FT All Share index dropped 11.5% over this period. This is one way Conçerva mitigate stock market losses.
Long Term Investing – We encourage you not to try to time the market
A nervous investor who sells out in the face of mounting losses, does not know when its best to get back into the market and this could be costly to an investor’s long run returns. In the past, a day of heavy losses can be followed by a massive surge in prices the next day. An investor who put £1,000 into FTSE 250 shares in 1989 would be worth nearly £27,000 by mid-January this year. But if the investor missed just the best 10 days in the market in the last 30 years that sum would be worth less than £16,000.