- Analysis from Quilter International and Quilter Cheviot reveals that those who divested at the bottom of the market could have lost over ten times compared to if they had waited until the end of June
Dubai, 20 July 2020: Since the dawn of the COVID-19 crisis, volatile markets have been the norm. This can make investors jittery and the cost of listening to those jitters can be immense. Analysis from Quilter International and Quilter Cheviot shows investors that sold at the bottom of the market in 2020 will have lost significantly more than if they waited till the end of June.
Looking at some key Investment Association (IA) sectors, reveals that depending on the asset class their investments would have only fallen in value from just 4% to 22% since the bottom of the market, which for most sectors was on 19 March. Although on average investors across all asset classes who have stayed invested have seen their investments lose 9% of the value of their investments.
For example, investors in the UAE, who had invested AED 100,000 at the beginning of the year and was invested in an average fund in the IA Global sector would have since seen their investment drop as low as AED 69,636. However, since then it has recovered to AED 95,684 by the end of June. Further examples of drops and recoveries can be seen in the charts below.
Brendan Dolan, director at Quilter International said: “Successful investors know that investing is a long-term commitment. Rationally we know that if we can ride out the periods of decline in the market, investments will recover.
“However, rationality does not always prevail and when you start seeing your investment value dropping as significantly as it did back in March it can be hard to just sit there. However, it is important to remember the purpose behind why you invested in the first place and to look at the whole picture rather than just last night’s negative headlines.
“Learning to cope with these emotions remains a vital lesson. When we see our portfolio value plummet along with our expectations, we need to be able to resist the natural temptation to run and sell when prices are low. A financial adviser can help you find the best investments for your current stage in life and help you stay the course of investing when your instincts are telling you to jump ship.”
Mark Leale, head of Quilter Cheviot’s Dubai office, said: “Without doubt, the falls in investment markets during the early part of 2020 and future uncertainty of the global economy were and understandably remain unnerving. Peace of mind, however, comes from a well thought out plan, with investments chosen to suit your own risk comfort levels. Moreover, the ability to speak with your advisers, revisiting these objectives and addressing any concerns, has largely protected investors from capitalising upon losses at the bottom of the market.”
He added: “Seeking financial advice should not be a one-off event. Whilst a professionally implemented plan will take consideration of your requirements and attitude to risk today, your appointed adviser and investment manager should be making sure that this information is frequently updated. These reviews allow you and your advisers to ensure continued suitability of the investments and wider planning that is in place. It is through this continued dialogue and analysis that you can have comfort that market and economic events, which are largely outside of your control, can be taken in our stride, without the need to make knee jerk reactions.”
Analysis by Quilter International and Quilter Cheviot
| IA Mixed Investment 40-85% Shares | IA Global | IA UK All Companies | IA Flexible Investment | IA Mixed Investment 0-35% Shares | IA Mixed Investment 20-60% Shares | |
| Value 1/1/2020 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 |
| Value 1/7/2020 | 91,175 | 95,684 | 77,588 | 91,445 | 94,145 | 91,165 |
| Maximum 2020 Value | 102,016 | 103,853 | 100,881 | 102,014 | 101,625 | 101,505 |
| On | 22/01/2020 | 16/02/2020 | 22/01/2020 | 22/01/2020 | 31/01/2020 | 22/01/2020 |
| Minimum 2020 Value | 70,467 | 69,636 | 55,576 | 70,498 | 77,992 | 72,947 |
| On | 19/03/2020 | 23/03/2020 | 19/03/2020 | 19/03/2020 | 19/03/2020 | 19/03/2020 |
| Fall from 1/1/2020 to lowest point | 30% | 30% | 44% | 30% | 22% | 27% |
| Fall over 2020 to 1 July | 9% | 4% | 22% | 9% | 6% | 9% |
| IA Mixed Investment 40-85% Shares | IA Global | IA UK All Companies | IA Flexible Investment | IA Mixed Investment 0-35% Shares | IA Mixed Investment 20-60% Shares | |
| Value 1/1/2020 | 250,000 | 250,000 | 250,000 | 250,000 | 250,000 | 250,000 |
| Value 1/7/2020 | 227,938 | 239,211 | 193,971 | 228,613 | 235,362 | 227,912 |
| Maximum 2020 Value | 255,039 | 259,634 | 252,203 | 255,036 | 254,062 | 253,762 |
| On | 22/01/2020 | 16/02/2020 | 22/01/2020 | 22/01/2020 | 31/01/2020 | 22/01/2020 |
| Minimum 2020 Value | 176,168 | 174,089 | 138,939 | 176,245 | 194,981 | 182,368 |
| On | 19/03/2020 | 23/03/2020 | 19/03/2020 | 19/03/2020 | 19/03/2020 | 19/03/2020 |
| Fall from 1/1/2020 to lowest point | 30% | 30% | 44% | 30% | 22% | 27% |
| Fall over 2020 to 1 July | 9% | 4% | 22% | 9% | 6% | 9% |
| IA Mixed Investment 40-85% Shares | IA Global | IA UK All Companies | IA Flexible Investment | IA Mixed Investment 0-35% Shares | IA Mixed Investment 20-60% Shares | |
| Value 1/1/2020 | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 | 500,000 |
| Value 1/7/2020 | 455,876 | 478,422 | 387,942 | 457,225 | 470,724 | 455,824 |
| Maximum 2020 Value | 510,078 | 519,267 | 504,406 | 510,072 | 508,124 | 507,524 |
| On | 22/01/2020 | 16/02/2020 | 22/01/2020 | 22/01/2020 | 31/01/2020 | 22/01/2020 |
| Minimum 2020 Value | 352,336 | 348,178 | 277,878 | 352,490 | 389,962 | 364,736 |
| On | 19/03/2020 | 23/03/2020 | 19/03/2020 | 19/03/2020 | 19/03/2020 | 19/03/2020 |
| Fall from 1/1/2020 to lowest point | 30% | 30% | 44% | 30% | 22% | 27% |
| Fall over 2020 to 1 July | 9% | 4% | 22% | 9% | 6% | 9% |