We hope that you and those close to you are healthy and safe. Times like these are a stark reminder of what is most important and taking care of the well-being of our families and our community is our shared and first priority.

As your financial advisers we want to give you support through this period and to start by looking at the impact of financial markets and what that means for you.

It would be wrong to suggest that the news from the financial markets is not uncomfortable and concerning. The media has reported daily and we can all see what is happening and the uncertainty created.

At periods like this it is sometimes healthy to do what the standard investment disclaimer tells you never to do – and to look at past performance. History tells us of previous times of disruption and uncertainty on financial markets and, within our own experiences, the recession of 2008 is a relatively recent memory. On each occasion the financial market recovered. The chart below goes back to 1926 and provides helpful context. Financial markets rise and fall – it is the actions of investors and their investment professionals that determines the long-term impact on individual outcomes.

Already we have seen encouraging shifts from those countries which first experienced COVID19 and are starting to emerge from the peak spread of the virus. While we do not expect a smooth or fast return to a more normal market environment, we do expect that a return will happen.

It is the view of our investment experts that the current period of intense disruption will pass. Moreover, if the authorities succeed in containing the spread of the virus, and if increases in bankruptcies and unemployment are limited, our experts believe the stimulus being put in place by central banks and governments could fuel an exceptionally strong economic recovery in the second half of the year. In 6 months’, time we will hopefully have entered a new phase of market stability with every possibility of new investment value and opportunity. Based on our experience it is best to stay in the market, and not incur the cost of missing on active periods of market recovery. This can have a negative effect your long-term returns.

Our Investment Approach

While we are in the current environment our principles of investment management hold firm.

Understand attitude to risk: As your adviser I have worked closely with you to make sure that your portfolio is closely matched to your own view of risk and comfort with loss. The current markets will be giving you pause for thought but I trust that we have matched your investment position to your individual situation. If you are finding that your attitude to risk is changing let’s talk and make the appropriate changes at the right time.

Invest for the long term: Our position, that value is driven by time in the market rather than a moment in time, is unchanging. Now is admittedly, a moment in time of extreme disruption but we hold our position. Economies and financial markets will steady and recover, and a longer-term approach to investing delivers better returns over time.

Diversification is vital: Our investment principles are underpinned by a structured and disciplined approach to diversification. Your Omnis portfolio is designed to ensure diversification of investment, asset class, fund manager and fund without any effort on your behalf.

A rigorous and focused Governance process: We have built a robust governance process. Every aspect of the current market turbulence is being monitored with experience and care. Our investment team only work for the clients of advisers within the Openwork network. They are only managing your money and the money of other people like you. Their sole priority is your financial well-being in every aspect of their work.

Our approach to investing is designed to insulate your money from the full turbulence of today’s markets. To ensures that you are well placed to be protected from impact during market turbulence and poised to take advantage of market opportunity when markets recover.

The portfolios that we recommend are matched to your appetite for risk and to your desired outcomes over the long term. Early indications even at this point show that this approach is working. Omnis investments, who manage some of our core portfolios, are providing performance updates on the Omnis website. If you would like to talk about your portfolios specifically, I am here to talk with you at any time.

Changes to how we work

It is our responsibility to support the continuation of good health across our community, while providing you with the support you need. So, we have taken the following steps within our practice to preserve our availability and service to you (to adjust as needed):

• Face to face advice is a cornerstone of our practice but your health is more important. We are now working remotely and practicing reduced social contact across the team.
• To stay in touch with you we have a range of technologies available – from the simple telephone call to online video chats using any one of (skype/ teams/ facetime) we can connect with you without requiring travel or close contact.
• Some of our processes may be a little slower at times due to remote working or absence within the team, but we have confidence that you can still expect the same levels of care and diligence in every aspect of our work for you.

Importantly our firm is part of Openwork which is a partnership that has collectively provided financial advice for over 45 years. Together we have seen many changes in financial markets and provided support and guidance to two generations of clients, in good times and in bad. Operationally this gives us strength and there are contingency plans operating across both our office here and everyone in Openwork to maintain that strength on your behalf.

We are here for you now – to talk about your immediate concerns, to help you make plans for the future…or just to talk.

The challenges we currently face will pass, and our main hope is that our team here, our clients and our communities emerge in health and strength.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Past performance is not a reliable indicator of future performance and should not be relied upon.

Turbulent week for markets as coronavirus continues to spread West

Lessons from history
Over recent years many investors have become used to a variety of political, financial and economic factors impacting markets, from the Brexit Referendum and subsequent prolonged uncertainty, to the global financial crisis and even further back to the dotcom bust in the early noughties. Although markets do not respond well to periods of uncertainty, fluctuations go hand in hand with stock market investment; and while market movements can be concerning, experience has taught us to expect the unexpected.

It is important to remember that some market turbulence is inevitable; markets will always move up and down. As an investor, putting any short-term fluctuations into historical context is useful. Investors with diversified portfolios, who stay in the market, have typically been rewarded over time.

Plan and focus, be strategic
Instead of being too worried by turbulence, the best strategy is to be prepared. It is best to stick to your well-defined plan and diversify your holdings, as well as expecting and accepting market movements. Your plan will be tailored to your objectives, in line with your attitude to risk and will take into account your financial situation, which will stand you in good stead to weather short-term market fluctuations.

In it for the long haul
Even though it can be difficult to ignore daily market movements, it is vital to focus on the long term, and remember that turbulence also presents investment opportunities. Investment requires a disciplined approach and a degree of holding your nerve if markets descend. Investment professionals know that markets can fluctuate and will inevitably go down as well as up from time to time. The worst investment strategy you can adopt is to jump in and out of the stock market, panic when prices fall and sell investments at the bottom of the market.

Keep calm and carry on
On the day of the Budget, the outgoing Chairman of the Bank of England, Mark Carney and the Chancellor, Rishi Sunak, were keen to highlight the temporary nature of the downturn, that is worth bearing in mind. Both the BoE and the Chancellor have taken steps to support the UK economy, which should also help to calm the markets. The BoE has cut interest rates on two occasions and expanded its bond buying programme, known as quantitative easing. Meanwhile, Mr Sunak announced a package of emergency measures for UK businesses worth £350 billion.

As Rudyard Kipling wrote, it is important to “keep your head when all about you are losing theirs” – a clear head will certainly stand you in good stead through these challenging times.

Market turbulence is a timely reminder to keep your investments under regular review – that is what we do best. Please rest assured we are working hard to manage the fluctuations, so your money has the best chance of growing for the future.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

30th March 2020

LAST WEEK – KEY TAKEAWAYS

Markets: Global shares recover as US announces substantial government support 

• Markets rallied as the US launched a package of emergency measures worth US$2 trillion in an effort to offset the impact of the coronavirus on the country’s economy (see below);
• Concerns about their potential impact weighed on the markets on Friday, but shares still recorded healthy gains for the week.
• Omnis view: The markets welcomed the measures which are broader than those launched in response to the 2008 financial crisis.  However, whether shares continue to recover depends on global efforts to contain the virus and the trajectory of the number of new cases.

US: Federal Reserve and government unite to bolster economy 

• The Federal Reserve- the US central bank- put no limit on the amount of government and corporate assets it will buy through its expanded programme of bond buying, known as quantitative easing;  
• As part of the US$2 trillion of measures signed into law by President Trump on Friday, the US will offer emergency loans to businesses and send money directly to consumers.
• Omnis view: These measures are designed to protect businesses and jobs and ensure the financial system continues to function during the temporary shutdown of economic activity. Handing money to consumers should boost demand and drive future growth.

Global economy: Coronavirus weighs on business activity and employment

• Evidence of the impact of the coronavirus on the global economy emerged as business activity in the UK, the US and Europe slowed to the lowest point since analytics firm IHS Markit started measuring in 1996;
• Meanwhile, the number of people claiming unemployment benefits in the US rose by over three million last week, according to the US Labor department.
• Omnis view: While a recession- two quarters of negative economic growth- is likely in the first half of the year, the measures put in place by global authorities could lead to a relatively quick rebound if the spread of the virus can be contained.

LOOKING AHEAD - TALKING POINTS

Economic data

• Tuesday- Japanese unemployment rate in February;
• Wednesday- EU unemployment rate in February;
• Thursday- US imports, exports and balance of trade in February;
• Friday- US non-farm payroll report (job creation) in March.

I have exchanged on a new property, but not moved in. What should I do?

The Government has stated that they do not want you to move during the lockdown, unless it is in exceptional circumstances. If you can therefore delay your move then you should. Mortgage lenders are now extending the expiry date on offers by three months to hopefully allow more time, while many solicitors are adding new clauses into contracts in case purchases don’t progress.

I have completed on a new property, but not moved in. What should I do?

As with exchanges, the Government is requesting that moves don’t occur unless there is no option. If you do have to move, then take extra precautions to adhere to the social distancing rules.

Can I qualify for a repayment holiday?

All lenders are required by the Government to offer borrowers the opportunity to take a three-month payment holiday. This is true for all homeowners, Buy to Let mortgages and for clients who have used the Government's Help to Buy scheme. The repayment holiday is available to borrowers who are up-to-date on their mortgage payments and not already in arrears.

Should I take a repayment holiday?

We believe that over 1 million borrowers have already requested a holiday and if you are in a position where you will struggle to meet your monthly mortgage payments, then it is a sensible thing to do. You won’t need to go through a means test or demonstrate your income drop. There also isn’t a fee to pay. However, I would stress that this is not free money and that you will need to make up the missed payments in due course. Instead at the end of the three month holiday, you will need to agree higher repayments moving forward with your lender or extend the term of your mortgage. As such, taking a holiday will cost you more in the longer-term. My recommendation would therefore be to not take a holiday unless you really need to.

Also, if you are coming up to the end of term on your existing mortgage deal, then be aware that taking a repayment holiday could impact on whether or not you can qualify for a re-mortgage or a new deal with your existing lender. Please therefore talk to me first before applying.

It's important that you don’t cancel your direct debit to the lender. Simply cancelling the direct debit may cause issues later down the line when you come to the end of your payment holiday and could cause you to miss a mortgage payment in the future. A missed mortgage payment will show on your credit file.

I can’t get through to my Lender. What should I do?
All of the lenders have been swamped with calls from borrowers about repayment holidays at a time when they were also trying to move significant numbers of staff to remote working. Many have consequently struggled to cope, leading to long waiting times. I would therefore encourage you to wait a few days for things to quieten down and try again or alternatively look on the lenders website. Most have detailed information on their response to COVID-19 and how to request a repayment holiday.

I am coming to the end of my current mortgage deal. Should I re-mortgage?

A significant number of products, particularly trackers and those at higher loan to value’s, have been withdrawn by the lenders in recent days. However, over 10,000 products are still available and rates remain at historically very competitive levels. Funding may become more constrained in future, so if you are within six months from the end of your current deal, please get in touch and I’ll talk you through the options available.

My income has dropped. How will this impact on my ability to get a mortgage?

All lenders look at your current income and any expected or known changes when they assess whether you can afford a mortgage. With access to a comprehensive range of lenders from across the market, I can help you find a mortgage that’s right for you and that is affordable based on your income and expenditure.

I am looking to buy a property. Should I continue?

The number of property transactions are dropping fast and we expect the market to be in a state of suspended animation for at least the next two to three months.  As such, even if you wanted to make a purchase you would find it difficult, unless it was a property you already knew and therefore didn’t need a survey and were buying with cash only. There are plenty of commentators predicting a big fall in house prices, but in reality this is guesswork and it will be many months before it is clear whether or not prices have been impacted. Most property purchases are made for a reason – perhaps clients need more or less space, or they are changing work location - so on that basis alone I expect the market to gradually re-start once the immediate lock-down eases. 

Your home may be repossessed if you do not keep up repayments on your mortgage.

Investors remain hopeful that lockdowns will continue to ease enabling governments to get the economy moving again.

In terms of currency, £ Sterling ended April at 1.26 US Dollars.  This was 1.4% higher than the figure at the end of March.

Similarly, against the Euro, £ Sterling ended April at 1.15 Euros, which was 2.1% higher than the March closing figure.

Inflation, as measured by the Consumer Prices Index including owner occupiers’ housing costs (CPIH).  It was 1.5% in March 2020 (this is March’s data which is reported in April).  This was down from 1.7% in the previous month.  The 12-month rate for the Consumer Prices Index (CPI) rate which excludes owner occupied housing costs and council tax was also 1.5% in March, also down from 1.7% in February.

The Bank of England maintained interest rates at 0.10% in April, following the two rate cuts in March.  The first cut to 0.25% was on 11 March followed by a further cut to 0.1% on 19 March. 

The Omnis Managed funds, Openwork Graphene Model Portfolios and Omnis Managed Portfolio Service provide you with a diversified asset allocation in line with your Attitude to Risk, investing in Developed Market Equities, such as UK, US, Europe and Asia Pacific as well as Emerging Market equities.  Cautious and Balanced investors will also have significant holdings in UK and Global Bonds, as well as Alternative Strategies.

We believe this multi-asset approach aims to minimise global equity market falls in volatile periods.

Past performance is not a guide to future performance.  The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations.  You may not get back the amount you originally invested.