InvestmentsMar 10 2020

What advisers are telling clients in latest market turmoil

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What advisers are telling clients in latest market turmoil

The sharp falls engulfing global equity markets in recent days may have caused concern among investors, leaving advisers to contain the panic.

The FTSE 100 was down 7.7 per cent yesterday but opened 1 per cent higher this morning, while the FTSE 250 was down 18.7 per cent in the last month.

The Dow Jones Index of US shares is down 18.5 per cent in the past month, and the Nikkei index in Japan is down 16.9 per cent over the past month. 

Alan Steel, chairman of Alan Steel Asset Management in Linlithgow, said he reassures his clients not to panic.

He said: “Having been through four [market crashes] since 1973, that’s why we built your portfolios with [defensive as well as aggressive assets] to protect you. And remind them that when utter and senseless panic is in the air, not to join in.

"The worst investment decisions, buying and selling are made when the inmates are temporarily running the asylum. Sit tight, and if you’ve got spare cash, drip it in monthly.”  

Similarly Philip Milton, who acts as both a financial adviser and a discretionary fund manager at PJ Milton and Co in Devon, has emailed all of his clients, asking them if they can defer withdrawing money "to ensure they do not take funds at a dangerous moment".

He also wrote: "If you do force sales in the face of a market which is not enthusiastic to buy from you, you will sell holdings at lower prices than they should be valued and which you deserve. 

"Sometimes even the sale of a stock can be enough to push prices down more, as the good and the bad face the same reluctance from buyers to do much other than sit on hands. 

"Market makers are happier pushing prices lower even if in some holdings there is little activity."

But Francis Klonowski, who runs advice firm Klonowski and Co in Leeds, said none of his clients have been in touch with him regarding the current market falls.

He added: “I don’t know if that is a function of what we always say to people, which is that we invest for the long-term. And to be honest, if someone did have any questions about the short-term I am not sure what I could tell them.

"I think if someone wants to exit the market because of current events, they probably shouldn’t have been investing anyway. One client came for a meeting this morning, and I showed him a graph showing the performance of his portfolio  since December, and the client just shrugged, he knew what these movements are.” 

Brian Dennehy, who runs Dennehy Weller, an advice firm in London, and fundexpert.co.uk, said the message he has had for clients is “well done”, as many have cash weightings of up to 50 per cent and so have been protected from recent falls. 

On the asset management side, James Sullivan, a multi-asset fund manager at Miton Optimal, said the panic was a "rather unpleasant experience and feels somewhat bruising"

He added: “In isolation, the peak to trough sell-off in equity markets is not all that impressive by historical measures, but the speed and ferocity is.

"It is this that has magnified the panic, no doubt aiding a negative feedback loop of sell first and ask questions later. The market doesn’t like uncertainty, and we have that by the bucket load right now."

He said he had added to Japanese equity, UK equity and bought more global beta for our multi-asset funds, increasing net equity by as much as 5 per cent in recent days.

"When the equity market rallies, it’ll be more about beta than alpha; we can worry about weeding out non-core themes at a later date. This, we feel, positions us well for when the market blows itself out,” he added.

Simon Edelsten, who runs the £265m Mid Wynd International Investment Trust, said he had been worried about the strong performance of many markets and so was holding 7 per cent of the fund in cash when the market sell-off began.

He said: “The virus may well be less of an issue as winter turns to spring, but world economies were fragile and the disruption and press panic is likely to take large economies into recession – especially in Asia, core Europe and probably Latin America. 

"It is hard to tell how deep and how long this will last, so we will be adding to positions slowly. The bulk of our investments will cope perfectly well with a slowdown being very well financed and in defensive sectors such as Healthcare, Renewable energy and Online companies such as Apple and Google – little affected by economic slowdowns.”

david.thorpe@ft.com

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