Markets remain volatile in the wake of the collapse of Silicon Valley Bank and the emergency loan given to Credit Suisse by the Swiss Central bank, and this really isn’t surprising, markets hate a crisis of confidence.
By way of reassurance, I just thought I would share with you a couple of paragraphs from an update I have just received from Scottish Widows, in response to this renewed volatility:
What does it mean for our investors and our portfolios?
The issues that have arisen over the past couple of weeks appear to be contained in several US regional banks, and in our view, any troubles these firms are experiencing do not represent a systemic problem for investments globally. But these events have served to highlight how uncertainty can cause volatility in financial markets, particularly as they have come in the wake of the significant investment rises and falls that we have seen for several years.
While we understand that when market falls occur, they are unsettling for investors, we believe it's important not to panic and react hastily. As such, while we continue to assess events, we are maintaining a focus on our long-term approach to investing - an approach that we believe leads to better investment outcomes.
Notwithstanding any current volatility and challenges for investment markets, we still have confidence in the outlook for returns over the long term. Risks or volatility in one investment type, or one region, tend to be smoothed out by the moves in others. This effect could be seen in markets in recent days; when equities declined on the back of news about Credit Suisse and SVB, many government bonds rose in value. This is why diversification is key.
We are not making any asset allocation changes on the back of the market moves we have seen this month. Furthermore, we do not expect there to be any fundamental changes to the long-term returns or volatility of investment asset classes. We are maintaining our investment discipline and long-term investment focus. This is because our experience shows that markets tend to return to growth over the longer term.
If you would like a copy of the Scottish Widows update, please do let me know.
Have an enjoyable weekend.
I hope you have found this helpful but, if you have any questions about this piece or any other finance related matter, please do not hesitate to get in touch.
Yours sincerely,
Graham Ponting CFP Chartered MCSI
Managing Partner
