Articles

Navigating bumpy markets

3 minutes

Geopolitical risk. That’s investment speak for one of the reasons for stock market volatility and is also a description of the distressing situation currently in Ukraine.

In recent years we have become used to volatile markets following a period of stability. That does not mean it is not an uncomfortable journey for investors though. Recent images in the media are something we never expected to witness again within Europe. When we see armed conflict and the impact on individual human lives on the news, as well as related falls in the FTSE 100, it is natural to feel anxious.

During a period of such anxiety, our smoothed managed funds are designed to try create an investment journey that you don’t need to worry about. These funds allow for a smoother journey, helping to iron out the daily volatility in markets, and allowing investors to think about the long term without worrying about the short term.

Our unique smoothing mechanism provides an average of the unit price over the last six months*. This means the daily peaks and troughs of investment volatility are smoothed out.

Our smoothed managed funds are also highly diversified. This means they hold different types of investment and are globally invested to reduce the impact of market fluctuations in any particular region. One fund will hold thousands of underlying investments including shares, bonds, cash and commercial properties. Not all of these will react in the same way to world events. For example, we have holdings in US Treasuries which are seen as a safe haven for investors and so have recently performed very strongly.

Our funds are also actively managed by an expert investment management team. They are able to prepare for, and react to, world events and position the portfolios appropriately. However, this is always with a long term and patient approach in mind.

We cannot predict the outcome of the current events in eastern Europe or their impact on stockmarkets. However, our smoothed managed funds offer investors concerned about volatile investments a solution that has been proven to cushion the blow in previous times of stockmarket angst whilst still providing long term investment growth.

To find out more about our smoothed managed funds please speak to your financial adviser.

* Please note, there are some exceptional market conditions which may result in smoothing being suspended. This can be where the underlying price is 80% or less of the smoothed price or at our discretion if the cost of smoothing becomes higher than the Board feels it is reasonable to bear and we believe it prudent and necessary to protect existing policyholders. We follow strong internal governance processes to determine whether and when to implement this changes. For new investors the smoothing mechanism may be introduced as a gradual averaging period for the first six months.

Past performance doesn’t reflect what will happen in the future. The value of an investment can go down as well as up.