Market Volatility – Week Beginning 7th April 2025
As the global economy faces up to the Trump Administrations Tariff strategy, it is appropriate to look at how risk asset volatility is impacting the valuations of Pension Plans, Individual Savings Accounts and other investment linked assets. By doing this we can then address what actions can be taken to minimise the damage to capital value, where possible.
We have mentioned in previous updates that the best way to navigate this type of volatility is to stay invested through the investment cycle. This advice has served clients well historically and we would continue to recommend this course of action at this juncture. It is never easy to stay invested through difficult market conditions but if you look at recent examples of market volatility, such as Covid 19 and the outbreak of hostilities in Ukraine, the investment backdrop does improve and valuations do recover.
In 2020, when the market volatility was caused by a global pandemic and therefore was much more difficult to predict and navigate, we advised clients to look at what income or capital they were drawing from their investments. The point of this was to assess whether or not it would be possible to reduce or suspend the withdrawals to assist the capital to be less impacted through the period of volatility we were experiencing. We know that is will not be possible for all clients but we are suggesting that where this is possible it should be given strong consideration. By reducing or suspending ad-hoc non-essential withdrawals for a temporary period you will give the capital base the scope to be in a stronger position when a recovery in sentiment and valuation starts to develop.
We would plan to be having conversations about this strategy with clients during planned review meetings but in light of current circumstances we think it is appropriate to communicate this possibility as early and as widely as possible. If you want to contact us about this we will be here to answer your questions and provide the necessary advice to allow you to make informed decisions about how you progress with matters.
Our recent experience has shown that this type of strategy can assist the longer-term goals you have for your invested capital and therefore is something that should at least be considered during this period of extreme volatility.
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