As the current Coronavirus situation and market reaction deepens, and mindful that many of our clients will have received letters from us regarding portfolio valuations, we feel that it is necessary to continue to keep clients fully informed throughout this period of uncertainty.
Following our update last Friday, all major stock market indices continue to experience significant volatility being driven by the ever-evolving situation around Coronavirus and in addition a weakening oil price, as we highlighted last week.
Much has changed over 7 days, with most European countries now in lockdown and the announcement that all UK schools will be closing from Friday (with the exception of children of key workers).
From an economic perspective, within the UK the Chancellor, Rishi Sunak, announced an “unprecedented bailout” of £350bn for companies, vowing to do “whatever it takes” to see the UK through the current health crisis. Indeed, this has been followed by the ECB with an emergency package of €750bn, which will expand the current bond purchasing programme incorporating Government and Corporate Debt across the Eurozone and ECB President, Christine Lagarde, added that “there are no limits” to its commitment to the Euro. This is in addition to any fiscal measures being proposed by individual EU members. In the US, an equally ambitious bailout package of $1tn has been put forward.
Governments and Central Banks around the world continue to offer significant levels of support for markets, as we saw following the Global Financial Crisis (GFC) in 2008. Whilst we would fully expect that this will be beneficial to markets over the coming months and years, as we experienced post GFC, it would appear that sentiment and confidence in markets will require a change in medical data (numbers peaking and falling) and/or the progress for a vaccine before we see a marked improvement.
We continue to digest information and monitor our portfolios closely and remain resolute that markets will recover from this ‘shock’ and that values will recover from these low points. For now, we have not made any changes with risk and market timing considerations being paramount.
We thought that it would be worthwhile to highlight how our portfolios are traded. The majority of our holdings within portfolios are collective investment funds. These have a fixed dealing point each day, which for the majority of funds is midday. Any trades placed before 11am would then be priced at the midday dealing point, when all of the fund’s underlying stocks/bonds are valued.
What we have seen throughout this volatility is that markets are changing so fast that a particular index (made up of the underlying stock components) could be significantly up or down prior to the dealing point, only for this to swing the other way in the afternoon especially with the influence of the US market opening after lunch in the UK. Trading in this environment, therefore, adds another element of risk in aiming to capture upside and avoiding falls and is, therefore, another consideration in our management process.
This week we have seen early indications of the FTSE 100 Index finding a floor and indeed there has been more positivity in the last couple of days. However, markets are highly sensitive on an intraday basis to positive/negative news flows and as we enter more stringent isolation measures over the coming weeks we fully expect markets to remain volatile.
As mentioned above, we are aiming to provide more weekly updates during this period to reassure our clients. We continue to be available to discuss your portfolio in more detail or any concerns that you may have with our contact details below.
Boolers Business Continuity Plans
As with all other organisations, we have been planning for the potential impact of the Coronavirus for some time and this message is designed to reassure clients and all business partners of our Business Continuity plans.
Our aim is to continue to provide the necessary service, administration and advice to clients on an ongoing basis whilst attempting to minimise the risk of our operation as well as safeguard the well-being of our staff. In line with the latest advice from the UK Government, we are limiting the physical movement of all owners and staff, especially those deemed more vulnerable. All future meetings with clients will now be conducted remotely e.g. by telephone, and we are currently operating a shift system in the office, although partners and employees have remote access to all of our systems.
We will continue to operate the business with the utmost respect for the health and well-being of clients, owners, staff & their families and the wider community. Our policies and procedures are all subject to regular review. We would encourage you to continue to communicate with us should you wish to discuss your situation in clearly what are very difficult times. All relevant contact details are shown for everyone in the organisation www.boolers.co.uk , or you can contact the office on 0116 2407070.
Thank you for your patience and support.
Boolers Investment Committee
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