Following last week’s more upbeat market update, this weeks’ review has more of a sobering tone for markets, investors and the wider public in general.

As expected, there has been a significant increase in both the number of coronavirus cases report and sadly the number of people who have succumbed to the virus. Over a million people have now been confirmed as being infected, with Europe and the US becoming the epicentre of the global pandemic.

Closer to home, whilst figures in the UK continue to rise, we take encouragement from data this week with multiple sources reporting that the social distancing measures put in place are beginning to show effective signs of slowing the transmission rate which may now be below 1 (versus a 2.6 average).


At the time of writing most major global stock markets are down slightly in a week that draws to a close the worst quarter of equity performance since 1987. What headline weekly figures mask is the significant daily and intra-day volatility that continues to be experienced, as we highlighted in our update last week. Despite the fall, it seems, for the now, that equity markets have found new arbitrary levels of resistance on indexes that are higher than the lows witnessed during the middle of March, which is promising to see.

Elsewhere, we have seen the Oil price collapse to its lowest level since the turn of the century having halved in the last month alone. Initially caused by a dispute between Russia & Saudi Arabia, it is now undoubtedly being affected by a lack of demand as the global slowdown takes hold.

Economies across the world are now firmly showing signs of the inevitable stress being placed on them. Of course, as we have previously discussed, this is largely to be expected given the unprecedented nature of the pandemic, with both the supply side (disruption in supply chains) and the demand side (reduced ability for consumers to spend) of economies being restricted. The million-dollar question remains whether this is merely transitory or is it the start of a more pronounced period of recession?

As highlighted in last week’s update, Central Banks and Governments across the globe are supporting their economies with measures that would seem almost unimaginable only a couple of months ago. It remains our belief that once kick-started, these will support the shorter term and provide a necessary buffer to prevent any long-lasting drag on the global economy.

Portfolio Changes

After much discussion, and waiting for the preliminary dust to settle after a brutal few weeks, we have made the decision to implement a change to our existing models. We have sold our entire holding of Artemis Global Income and have added to our existing holdings in the iShares S&P 500 ETF and Rathbone Global Opportunities Unit Trust with the proceeds. The move will increase our exposure to the US as well as increasing ‘quality’ within the portfolios, as stronger more robust businesses continue to get stronger.

Whilst we aren’t suggesting that the US economy is immune, history has tended to suggest that it is a market that has led the way and with a plethora of multi-national firms, many of which are global leaders in their respective fields, we believe it will be best placed to capture any subsequent market rally as and when this occurs. The move has been done with minimal disruption to portfolios, utilising existing cash balances (where available) to provide a seamless transition that hasn’t compromised on exposure to markets – a point also raised in last week’s review.

For those clients invested for income, this will marginally reduce the overall yield in relative terms on the models, although this is expected to be negligible. However, it may also be prudent to address expectations regarding income more generally, given that it is likely to be lower for the remainder of the year. As we have seen with UK banks this week, cuts to dividends are predicted across the board as firms retain cash to provide protection and cover short-term liquidity concerns. It is difficult to assess the magnitude or duration of these reductions, but feels right to warn that a pragmatic approach to income might be required for a period of time.

We hope that both you and your family are managing to keep safe and well at this difficult time and would like to remind you that we are all available to provide additional comment and support as required.