27 March 2020 Asset Intelligence: COVID-19

I’m Robert Love and I’m Head of Research at Asset Intelligence Research.

You may not have heard of Asset Intelligence, but we play an important role in your investment portfolios, and given the current market conditions we thought it would be a good time to create a video explaining who we are, provide some insight into what’s going on in the markets and, what you should be doing during these difficult times.

Who is Asset Intelligence/what do we do?

First of all, who we are. Asset Intelligence is an investment consultancy, that works with leading financial planning businesses, to build, monitor and to manage investment propositions.

We also provide research and insights that cover a number of different areas. For example, our team provide qualitative and quantitative analysis, that’s detailed research covering investment funds and strategies as well as macroanalysis (looking at the factors affecting global economies) to name but a few.

In short, we provide financial advisers with the tools they need to make sure they are equipped to provide you with the best and most informed financial advice possible.

What’s happening right now?

We’re bringing you this video at a particularly difficult time. We know a lot of people are worried about what is happening right now, both from a health perspective and also with regards to their investments. In this video we’re setting out to provide you with some guidance with regards to your investments.

In terms of the markets, I would best describe the situation we’re in right now as similar to being in the middle of a storm.

It’s important to remember, that whilst markets may feel very scary right now, we have certainly seen and experienced scenarios like this many times before. Since the start of this century alone we’ve seen Brexit, the Greek debt crisis, the Global financial crisis and the dot.com crash, to name but a few.

And whilst each situation was markedly different, in each case, markets recovered strongly. It may have taken months, or in some cases years, but markets did recover and go on to provide strong returns. In the current predicament we firmly believe that this crisis will be followed by a recovery.

Should I transfer my assets to cash?

And for this reason, my opinion for anyone wanting to transfer their assets to cash would be to speak to your Adviser about your personal circumstances. I believe that the issue with transferring to cash is that you’re effectively ‘banking’ your losses. Whilst the markets could fall further, the risk you take is that you’re out of the markets when they start to bounce back. This means you could find yourself in a position of ‘selling low’ and ‘buying high’, a distinctly sub optimal investment strategy.

Looking for opportunities

The one good bit of news about the current situation is that prior to the markets falling, a lot of investments were overpriced, making it more difficult to find good investment opportunities. Now however, the opposite is true.

The key thing for investors right now is to remain invested. Reduced investment values are largely driven by the difficulty in seeing past the current crisis. This lack of clarity in outlook and fear of the unknown means that company valuations will not necessarily reflect their true outlook in the current environment.

Right now at Asset Intelligence we are busy trying to identify investments, where the outlook is positive, but the price has fallen due to the current market conditions.

What exactly are Asset Intelligence doing?

In addition, as you might expect, our analyst team have been busy reviewing all funds we have exposure to, to understand each managers’ capabilities in this difficult period. The team are asking a series of detailed questions on manager’s fund positioning, outlook and their assessment of the opportunities for us moving forwards.

Taking you back to basics, investment portfolios consist of two main types of assets, defensive and growth. Defensive assets are those that are typically lower risk and deliver steadier returns, such as cash, gilts (government bonds) and or corporate bonds, that’s loans to companies. Growth assets on the other hand tend to be higher risk, with potentially higher return assets such as equities – stocks and shares.

It’s worth remembering that your portfolio will contain a mix of defensive and growth assets. Portfolios are extremely diversified, investing in different asset types, geographical regions and with different asset managers, each employing different investment approaches. This means portfolios will not be overly exposed to the risks inherent in any single business or asset.

We are working closely with your financial adviser to ensure portfolios are, and continue to be, well structured for the long term and positioned to support you in achieving your longer-term financial planning goals.

Closing statement

In closing, I would like to reiterate that whilst we appreciate these are unsettling times, we have experienced similar periods before. History tells us that at some point the markets will recover, so now is the time to remain calm, face the storm and ensure we’re well positioned for when the markets recover.

We are speaking to your fund managers on a regular basis and we are researching the market for good investment opportunities.

We look forward to the storm passing and for sunnier days.

Please note, these are the views of Asset Intelligence Research. For advice on your personal circumstances, please speak to your Financial Adviser in the first instance and they will recommend the right solution for you.