An update from Iain McCulloch, Director HJS Financial Planning Ltd – 18 March 2020

1. Client Meetings

As part of our preparation to deal with the coronavirus all review meetings will now be made using either the Phone or Skype type technology.

Recommendation meetings and new client meetings will, for the foreseeable future continue to be initially arranged on a face to face basis. However, we will always take both our client’s and our adviser’s wellbeing into account so if either our adviser or you have any concerns prior to the meeting we will of course arrange the meeting by other means.

In addition, we would also encourage all those who have yet to sign up to the Personal Finance Portal to do so as soon as possible.  This will allow us to communicate with you securely and privately, limiting the need for posting documents or face to face meetings.

If you have lost your log in details please contact [email protected] and we will reissue. Please note, some of the data on your portal may not be correct as we are currently completing a cleansing operation on our client files.

2. News

Following my recent email, the spread of coronavirus (and fear of this) continues to have major adverse effect on financial markets. Today has seen a minor rise (1.3% at time of writing)

The Government has now moved to a position of suppression; this means that we are actively advised to act in a way that limits the spread of the virus as recent scientific evidence suggests this is the best way to deal with the virus

Even though this is a difficult time for the country and even more painful for those who have lost loved ones, it is difficult to see how this will not now result in a short, sharp global Market Downturn. However, unlike 2008, my view is that this will indeed be short-term to be followed by an economic recovery in the summer as this virus comes under control.

It is worth stressing that while the virus is spreading quickly globally, its progress in China has slowed significantly in the last week with only 16 new cases identified on Monday. China is slowly returning to normal with some travel restrictions lifted and industries resuming production.

I appreciate this is a worrying time for us all, both in terms of the potential health impact and the falls in the value of our investments and pensions. However, I would continue to stress the need to keep a laser-like focus on the longer-term. The world is not ending, and economies and stock markets inevitably recover from shocks and I do not believe this will be any different.

It is also important to note that corporate bond and gilt funds have generally not fallen in value and these are an important part of the portfolios that most of our clients hold. To help illustrate this, we have reviewed the performance of a typical portfolio for three main levels of risk and compared this to the performance of the FTSE 100 Index. The table below shows performance over 1 year and since 01/01/2020.

Risk Level 5 year performance 1 year performance Performance – since 1/1/2020
My Folio II 13.25% -3.64% -9.55%
My Folio III 13.30% -6.96% -13.63%
My Folio IV 14.37% -9.41% -16.84%
FTSE 100 Index -6.93% -25.37% -30.94%

This demonstrates the importance of portfolio diversification and how investment across different asset classes reduces volatility when stock markets are falling.

It is fair to say that what we are seeing in terms of global stock market falls is comparable to the 2008 Financial Crisis. That said, we are well placed to weather the storm.

Please note that the figures provided are for a typical portfolio and your portfolio may differ from that shown. Therefore, your portfolio may have fallen more or less than that shown albeit we do not expect this will be significantly different.

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