Introduction

At this time of year, we would normally prioritise our coverage of the Budget as there is usually somuch to digest. However, apart from trying to figure out how the Government 'really' intends topay for all the public spending projects announced, this weeks’ Budget was fairly benign.

Therefore, given the sheer volume of news attention to the Coronavirus, we thought we would share our views and some observations.

During periods of extreme stress and panic the natural tendency is for investors to move to the perceived 'safety' of cash or Government Bonds. We believe that this is potentially a risky thing to do (i.e. the global banking system is still vulnerable despite some improvement since its near collapse in 2008 and Government debt default potentially increases during health crises). NB Global debt has increased 50% since the financial crisis of 2008.

A typical Autus Asset Allocation portfolio contains around 13,000 holdings in separate shares and short dated bonds. There may be individual casualties (such as Flybe) but the total end of the global capitalist system is extremely unlikely. If that occurred, hardly any of us would be left to enjoy it anyway.

We don’t wish to downplay or appear mercenary about the Coronavirus pandemic but it's not all negative; it is important to remember that risk (like gravity) is a fundamental driver of investment returns (i.e. the more of it, potentially the more return in the long term) so it is vital to remain invested.

Our advice, as in previous upheavals, is to 'stay strong'.

For those of you who are interested, we have included a separate section outlining some observations relating to historical pandemics and the impact on markets.

We hope you find this update useful. As always, if you have any questions, please don't hesitate to get in touch and one of the team will be happy to help.