Dear Fintax Investor,
Please find attached the latest month’s Fintax Fund Fact Sheets. Last month, the Fintax Funds declined -6.8% (Balanced) and -8.9% (Growth), relative to -9.5% for global equities (MSCI All Countries World Index) and +1.5% for global bonds (ICE BofA Global Broad Market Index).
Given the ongoing extreme volatility in the market, we have provided direct feedback from the investment team. Please find this below.
‘’No doubt, investors have felt acute discomfort at the lurid headlines highlighting the worst day for stock markets since 1987. I can assure you that we feel the discomfort just as much as you and we are working tirelessly to assess the opportunities in markets for our valued investors.
Our Director: Investments, James Klempster, CFA appeared on CNBC earlier this week as the Covid-19 related news began to worsen and he stated that it was our stance to hold our positions for now rather than to make knee jerk alterations. This remains our stance. View James on CNBC.
The reason for this is the recent price action (Thursday’s 10%+ falls in particular) seem to show a move in the markets from complacency about coronavirus to, at the very least, a good appreciation of the potential humanitarian and economic impact of Covid-19. While we expect further shut downs to economies from here, the chance of them providing a negative surprise to markets is now lessened.
Thursday’s moves were large and were suggestive of indiscriminate selling: equities were, of course, down but even investment grade bond ETFs fell a similar amount which suggests to us that rational selling was intermingled with the irrational. It is emotionally driven selling which will, in time, provide us opportunities to reshape portfolios to deliver on your clients’ long term return requirements. As a result we are sticking to our tried and tested process to identify opportunities as and when they arrive.
From a long term perspective, we know that we will get through the pandemic and that well run businesses will continue to deliver value for investors over time. The comparison made by the media to Black Monday of 1987 is more instructive than might be immediately apparent: the market suffered very significant falls that are barely visible on a price chart today. As a result, we must not let the difficult experiences in the immediate past cloud our judgment. Today still does not feel like the right time to be brave and add significantly to risk but following Thursday’s price action we have moved substantially closer to the point that markets bottom. Calling that point exactly will be very difficult indeed. That is why we stick to our process. We had taken risk off the table progressively in 2019’s strong rally, moving from an equity overweight to a neutral position throughout the year.
While we have plainly not been able to fully isolate clients from the markets falls we have tended to preserve capital reasonably well meaning that clients have been isolated from the worst of the market moves.”