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Market Update – 21/05/2020

Over the last few days, I’ve been listening to the following Fund Managers for their input on investments and their views on markets:

  • BlackRock
  • J.P. Morgan
  • Schroders
  • Invesco
  • Prudential

In addition I’ve been listening to Curtis Banks on pension technical issues and the Federation of Small Business to hear Liz Truss in her position of MP, Secretary of State for International Trade and her views on where we are up to in the UK and with ongoing trade negotiations.

This research is on top of standard client advice work, I’ve not quite moved into the office, but it feels like I have sometimes!

Why do I do this level of research?  I want to get the consensus view on the global macro situation in the markets from the experts.  Fund Managers have substantial resource and spend a small fortune on research.

Whilst it is not an exact science and at the moment there are a lot of moving parts to take into account, I would say the general view is of cautious optimism.  Most Fund Managers are positioning for growth over the long term and for some Fund Managers for growth over the short term too based on modelling of scenarios and probable outcomes.

Markets are generally probably slightly too high as they tend to look through the very short term and focus on the (post virus?) future.

The risks are many and varied, the biggest one is a bad second wave of the coronavirus.  In addition, we have the US/China situation, Brexit trade deals (no deal Brexit?), Europe and US politics to name a few.

Consensus varies on where to invest if you have the freedom to choose but again common areas that appear good value now are Asia and Emerging Markets if you can take the volatility and associated risks.  As part of a portfolio or fund that is actively managed you get this allocation and the risks managed for you to some extent.

What next?

In summary you need to remain invested as you are for now, it is still too volatile to make fund switches.  If you have spare cash it is also a good time to invest, asset values are still low compared to valuations earlier this year.  You can try and buy into the dips, but this can be difficult to time.  Over the medium (5 years plus) to long term (10 years plus) you will see growth without perfect timing.

Paying regular monthly premiums into either pensions or investments is a good idea too.  If you can afford to increase your regular monthly contributions, please do.  This is a lot easier than trying to buy into the dips with a lump sum investment.  You may, if you are lucky, have spare cash with your reduced holiday and leisure spend!

Steve Speed