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Investment markets fall heavily as oil crashes and coronavirus fear spreads

No doubt you will see, if you have not already seen, that Global stocks have plunged today amid oil trade issues and coronavirus spreading.

We want to update our investment clients with the performance of our Risk Models against the Benchmark so perspective is gathered.  (This is an ad-hoc update of portfolio results which we will do again at the end of the quarter).

The headline grabbing news is that Global Stocks have plunged heavily, along with the FTSE 100 falling 8% upon opening, amid coronavirus fears and oil trade wars.

Click the link to ‘Global stocks plunge as oil crashes and coronavirus fear spreads’:
https://edition.cnn.com/2020/03/08/investing/stock-dow-futures-coronavirus/index.html

and the article from the Evening Standard – ‘FTSE 100 plunges 8%’:
https://www.standard.co.uk/business/business-news/ftse-100-coronavirus-oil-price-8-a4381792.html

FTSE 100  6001.25 (-7.14% @ 12.37pm)
FTAS       3355.01 (-6.80% @ 12.38pm)
DowJ      25864.78  closed

The main index in the UK (FTSE 100) is now approaching a 20% fall in value over the month.  The US market has yet to open (at the time of writing) but expectations are that the US markets are likely to fall and be in the same ‘ball park’ for Stocks/Shares suffering over the time horizon.

Volatility

The investment markets (globally) have moved into a bear market – which refers to asset prices falling by 20% upon fears of how the coronavirus is likely to impact the global economy.

Commentators have suggested that the impact of coronavirus is likely to have a temporary impact to the global economy, with infectivity and ultimately fatality levels being similar to other nasty virus epidemics, although dreadful and tragic to those lost.

Action or rather inaction

There is a saying in relation to ‘behaviour’ during times such as these …. ‘Play dead’.  Similar to the description of action should you meet a grizzly bear in the woods…  Fighting and wriggling would be very dangerous.  By staying calm, not making any sudden moves, you could save a lot of pain!

If an investor can suspend taking withdrawals – by selling units they should consider it, waiting for the unit prices to recover before commencing the selling of units again.

Diversity and asset allocations

You will see that Diversity – using Best of Breed funds across the asset classes have delivered a much improved result (to this point) against the headlines of the various indices’ losses.  Investors must remember that when they read the headlines in respect of the FTSE 100 that it is a pure equity list of stocks.

Falling asset prices are naturally concerning but ‘shutting the gate after the horse has bolted’ is fruitless.

Looking for opportunity

A bear market can provide opportunity for investors.  Beaten up, battered and underpriced for the long term are all descriptions of stocks during a bear market.

For long term investors, buying the ‘correction’ or ‘bear markets’ provides opportunity.

Warren Buffet is an example of a long term investor that takes advantage of buying the assets he likes when the price is right for him.  You may want to consider doing similar?


Click the link to read a recent article published on 28 February 2020 that details Warren Buffet views:
https://www.bestpricefs.co.uk/blog/investment-market-sell-off-driven-by-coronavirus/

Below are the up to date details of how our Risk Model (Risk adjusted) portfolios have performed.

The results are as we expected – doing what is says on the tin; passing the Ronseal test.

Of course, market falls – let alone moving into bear market territory – is concerning, but benefiting from a professionally constructed risk managed portfolio certainly delivers against a concerned market.

See below the results:

Risk Model 2
Not generally recommended for growth.  Some investors move to a Risk Model 2 when they feel a “Risk off” is best for their needs.

Historic Risk Score 2
Prospective Risk Score 2.76
Portfolio volatility 2.76
Benchmark volatility 3.75
Benchmark – Weighted Sector Average

1m 3m 6m 1yr 2yr 3yr 4yr 5yrs Since 19/6/14
Portfolio -2.10 0.45 -0.10 4.06 5.89 9.81 15.41 14.91 20.04
Benchmark -1.91 0.42 0.15 5.24 6.54 7.36 18.54 16.25 22.55

Difference – out performance, relative to risk

-0.19 0.03 0.25 -1.18 -0.65 2.45 -3.13 -1.34 -2.51

Risk Model 3

Historic Risk Score 3
Prospective Risk Score 3
Portfolio volatility 4.39
Benchmark volatility 3.48
Benchmark – Mixed Investment 0-35% Shares

1m 3m 6m 1yr 2yr Since 19/6/14
Portfolio -3.01 0.24 -0.26 7.22 9.76 12.17
Benchmark -1.91 0.42 0.15 5.24 6.54 5.56

Difference – out performance, relative to risk

-1.10 -0.18 -0.41 1.98 3.22 13.82

Risk Model 4

Prospective Risk Score 4
Portfolio volatility 5.62
Benchmark volatility 5.76
Benchmark – Mixed Investment 20-60% Shares

1m 3m 6m 1yr 2yr Since 15/6/17
Portfolio -3.97 -0.10 -0.94 7.23 10.09 13.40
Benchmark -4.21 -1.36 -1.35 3.71 4.73 4.50

Difference – out performance, relative to risk

0.24 1.26 0.41 3.52 5.36 8.90

Risk Model 5

Prospective Risk Score 5
Portfolio volatility 5.57
Benchmark volatility 8.52
Benchmark – Mixed Investment 40-85% Shares

1m 3m 6m 1yr 2yr Since 15/6/17
Portfolio -4.22 -0.28 -1.15 6.99 9.90 13.38
Benchmark -6.26 -2.44 -2.44 4.15 6.01 6.72

Difference – out performance, relative to risk

2.04 2.16 1.29 2.84 3.89 6.66

Risk Model 6

Prospective Risk Score 6
Portfolio volatility 6.85
Benchmark volatility 8.58
Benchmark – Mixed Investments 40-85% Shares

1m 3m 6m 1yr 2yr Since 15/6/17
Portfolio -5.08 -0.61 -1.97 7.32 10.82 14.48
Benchmark -6.26 -2.44 -2.44 4.15 6.01 6.72

Difference – out performance, relative to risk

1.18 1.83 0.47 3.17 4.81 7.76

Risk Model 7

Historic Risk Score 4
Prospective Risk Score 7
Portfolio volatility 7.97
Benchmark volatility 7.65
Benchmark – Weighted Sector Average

1m 3m 6m 1yr 2yr 3yr 4yr 5yrs Since 19/6/14
Portfolio -7.01 -1.71 -3.60 6.91 11.60 22.18 49.74 53.78 68.15
Benchmark -7.69 -3.40 -3.71 2.46 3.73 9.03 32.17 29.18 35.76

Difference – out performance, relative to risk

0.68 1.69 0.11 4.45 7.87 13.15 17.57 24.60 32.39

Risk Model 8

Historic Risk Score 4
Prospective Risk Score 8
Portfolio volatility 8.50
Benchmark volatility 7.95
Benchmark – Weighted Sector Average

 1m 3m 6m 1yr 2yr 3yr 4yr Since 29/3/10
 Portfolio  -7.49 -1.91 -3.75 6.70 12.00 23.89 53.20 57.68
 Benchmark  -8.19 -3.69 -3.92 2.33 3.59 9.32 33.80 31.53

Difference – out performance, relative to risk

 0.70 1.78 0.17 4.37 8.44 14.57 19.40 26.15

Risk Model 9

Historic Risk Score 4
Prospective Risk Score 9
Portfolio Volatility 9.45
Benchmark volatility  8.93
Benchmark – Weighted Sector Average

1m 3m 6m 1yr 2yr 3yr 4yr 5yrs Since 29/3/10
Portfolio -8.26 -2.30 -4.32 5.29 10.33 20.37 50.12 48.68 165.57
Benchmark -9.07 -4.27 -4.41 1.95 3.23 8.82 35.83 33.16 89.21

Difference – out performance, relative to risk

0.81 1.97 0.09 3.34 7.10 11.55 14.29 15.52 76.30

If you would like ‘advice’ – simply get in touch where we will do all we can to assist.

Warmest Regards.

Richard and the Best Price FS Team

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