Investment Insights February 2020
The global financial markets have been good to investors over the last decade, particularly in 2019 with both Global and New Zealand share markets posting stellar returns. We are now well into the new year and a new decade.
There is a lot going on in the markets over the past few months, with the US and China trade negotiations and Brexit, but all of these events have been overshadowed by the coronavirus outbreak.
Watch this edition to hear the market outlook for 2020, as well as current market sentiment including impact of coronavirus on investors.
In recent days, financial markets have become increasingly affected by the spread of COVID-19 infections to more countries around the globe and a sharp fall in the oil price has added to the volatility.
The inherent challenge is that containment of the virus spread requires a significant restriction of economic activity by governments and companies. While share prices have been falling, bond prices have been rising as yields fall, demonstrating the benefit of a diversified portfolio.
The volatile nature of the markets continues to be a reminder of the benefits of diversification offered via savings plans (such as KiwiSaver, FlexiSaver and Super Trust) and maintaining a focus on the long-term. Shocks like this don’t last forever.
7 things to remember:
1. Market corrections are normal;
2. In the absence of recession, a long-term market downturn is unlikely;
3. Withdrawals and fund switches after a fall may lock in a loss;
4. This could be an opportunity for investors to buy assets more cheaply;
5. While share prices may have fallen, dividends are smoother;
6. For many savings plans like KiwiSaver, FlexiSaver and Mercer Super Trust are a long-term strategy;
7. If unsure seek financial advice before you take action.
Mercer’s team of experts based in 40 countries around the globe, including New Zealand, monitor global and local events and bring you the latest updates. We also produce an investment report each month covering the Mercer KiwiSaver scheme, Mercer Super Trust and Mercer FlexiSaver, which includes returns for each of the seven funds. You can read the report here.