How does this relate to my investments?

Your long-term investment portfolio is designed to deal with this kind of event. Not only that, but it is the best place to be. We will endeavour to explain why this is the case below.

Our core investment philosophy is built on a number of premises. Some of the key beliefs are:

• Capitalism works. Capitalism is what underpins the world’s economy and is overwhelmingly the most successful economic model devised by humankind. The free market is a simple mechanism that brings together ideas for products and services, and the finance required to get them off the ground. Simply put, by investing your money, you effectively own a share in the best companies in the world, and thus a share of all future profits.


• Markets work. Capital markets are the best mechanism we have to calculate the value of an asset. No-one can make consistently accurate predictions over a reasonable period of time, and so our core approach does not employ predictions about markets or prices. Instead we use funds with broad exposure to the whole market, allocated to countries in proportion to their relative size in the global market.


• Diversification is essential. Diversification is the principle of spreading your investment risk around. Our core investment portfolios hold upwards of 13,000 individual shares and bonds in many countries around the world. This means the negative and positive influence of each individual investment is reduced, producing, on aggregate, less risk.
  
  

This is too overwhelming should I just cash-in my investments?

Absolutely not!

If you withdraw your investment, the money must go somewhere. In the extreme scenario described above, we believe that the areas listed below, which are normally perceived as ‘safe’, are paradoxically the most at risk. Under the circumstances, your investment portfolio is the best place to be.

Exposed Areas

1. Significant cash holdings in any single bank
2. Significant cash holdings across several banks
3. Money Market funds
4. Low-grade Corporate Bond funds
5. Significant direct holdings in Corporate Bonds
6. Commercial property
7. Significant holdings in any single company shares (e.g. Retailers, Manufacturing, Banks, etc)
8. Esoteric Investments (e.g. Gold, Cryptocurrencies, Fine Wines, etc)

If you have significant holdings in any of the above, then perhaps you might like to contact us to discuss your situation. Don’t panic; our advice is not to rush into any decisions.


Finally

At a time of such uncertainty, where do we place our faith? When the banking system and governments from around the globe are under strain, how do we ensure that our hard-earned money will not only survive, but continue to prosper in the long run?

Our view is that placing our faith in the ingenuity of humankind; the ability of the most successful companies from around the world to continue to succeed, is the best long-term place to be. Inevitably some companies will fail; that will always hold true. But equally, there will also be those who thrive, as in times of chaos there is always opportunity for those that seek to find it.

So, let’s work on the basis that it will ‘get worse before it gets better. Given that no-one can accurately or consistently predict which companies will fail or succeed, a truly globally diverse strategy is the only way we can ensure that we own a part of the future success stories that will fuel the inevitable recovery when it comes.

As mentioned earlier, we are here to help and support you in any way we can. If there’s anything you need, whether that’s talking through any questions you may have, or simply a friendly voice to talk to, we are just at the other end of the phone.

Equally, if any of your friends, family or colleagues wish to speak to a financial professional at this unprecedented time, perhaps just for a second opinion, please feel free to pass on our details.