Well, have the Markets settled down again? I honestly don’t know. In 30 years of business, the markets have never really settled down in my opinion. “Settled down” to me means a straight line in an upward trend on an ongoing basis. Bbut markets don’t behave like that. They are constantly moving up and down, but hopefully with a general trend upwards over the longer term. These up and down movements are called market volatility.
While market volatility can be nerve-racking for investors, reacting emotionally and changing long-term investment strategies in response to short-term declines could prove more harmful than helpful. By adhering to a well-thought-out investment plan, ideally agreed upon in advance of periods of volatility, investors may be better able to remain calm during periods of short-term uncertainty.
Investments involve risks. The investment return and principal value of an investment can (will!) fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Over the longer term, that redemption is hopefully more rather than less.
Many Investors look at how Funds have performed in the past. Do, however, be aware that past performance is not a guarantee of future results. And you should also be aware that there is no guarantee that strategies will be successful.
One of our favoured Investment houses, SEI, has commented on the current position of the Stock Market’s volatility. The extended period of calm for equity markets in recent years has come to a halt, pulling global markets lower.
While declines can be disconcerting, they are a normal development in the course of market movements. The volatility serves as a reminder of the value of focusing on achieving goals rather than on daily stock price movements.
They comment that Investors have enjoyed a long period of relative calm in financial markets, making the return of market volatility an unwelcomed interruption. Volatility can be unsettling, but its been seen it before. Market movements of 2% or more have been frequent occurrences at various periods in the past, and declines of 10% or more have historically occurred about every two years.
In their view (and ours), putting energy into developing and maintaining an investment plan that is designed to help you achieve your goals within a timeframe and level of risk of your choosing is the prudent approach. This is the foundation of investment strategy. The objective is to create diversified portfolios designed to provide more consistent returns over time.
And as I constantly tell clients, it’s not the timing of the market, it’s the time in the market!
Twenty years ago, ethical investing was seen very much as a pure values-based, exclusionary investment process.
Over time, this has developed into sustainability and engagement and now there are more funds focusing on companies which make a positive impact on their environment.
According to one IFA, “There is a pervading view that values-led investing is still about negative exclusion.
“The market has become increasingly complex and unless advisers have a personal interest in the area, positive investing is not likely to be viewed favourably.”
The growth of funds available is important, as ethical bank Triodos revealed most investors want their money to create positive change by investing in progressive and pioneering businesses.
Its latest research says 79 per cent of investors want to see a fairer and sustainable society, but 67 per cent of investors have never been offered ethical or sustainable investment opportunities.
While it’s encouraging to see further evidence of the growing demand for sustainable and responsible investment opportunities, the fact that two thirds of investors have never been offered them suggests a worrying disconnect.
The survey also revealed 55 per cent of people believe businesses have the power to solve many of the biggest challenges the world faces today, and 71 per cent say businesses have the power to create positive social and environmental change. Should your investments be of an Ethical Nature. At ABFM we advise a large number of clients on Ethical and Socially Responsible Investing. We can take account of your risk profile and diversify your investments at the same time.
If this is of interest to you, give us a call.
Aegon is dropping the Cofunds brand name as it moves users onto an upgraded version of the platform.
After acquiring Cofunds in August last year, Aegon has been working on integrating the platform with its Aegon Retirement Choices offering, bringing many of Cofunds’ features into ARC.
The decision to dispense with the Cofunds branding puts to bed one of the oldest names in the UK platform market.
When building an Investment portfolio for clients, their Attitude to Risk will always be a central concern. Asset selection should be determined as much by how much someone is prepared to lose as how much they are looking to gain.
With that in mind, Risk targeting should be at the heart of any investment model. The era of one size fits all when it come to investing, especially when with Multi-Asset Portfolios, rightly appears to be a thing of the past.