After a short-lived recovery, markets fell heavily on Monday 9th March, producing negative returns not seen since the financial crisis of 2008. The spread of COVID-19 continues to have a large impact on sentiment as we move into territory not seen previously with the likes of the SARS outbreak. In a ‘perfect storm’, Saudi Arabia and Russia became engaged in a ‘price war’ over oil output which compounded the negative trends.
At close on Monday 9th March, the FTSE 100 was down 7.7%, whilst globally the Dow Jones closed down 7.8%, the Nikkei 225 (Japan) down 5% and Australia’s ASX 200 down 7.3%. This “Black Monday” has resulted in both the Mazarin Balanced and Cautious Fund dropping in value by more than 10%, over the period of 21/01/2020 to 10/03/2020, the returns have been as follows:
IFSL Mazarin Cautious -10.09%
IFSL Mazarin Balanced -12.47%
Over a rolling three-month period, the performance is as follows:
IFSL Mazarin Cautious -6.34%
IFSL Mazarin Balanced -8.19%
Whilst we appreciate that these figures are of course disappointing, at BAM we remain confident that our long-term investment approach and diversification will see our investors through these difficult periods. In addition to this, investors usually receive the best returns in the recovery period immediately after a significant market drop.
As we look to the future and market recovery, on 10th March the Bank of England (BoE) announced an emergency interest rate cut of 50 basis points, to 0.25%, the lowest level in history. Though the ultimate impact of COVID-19 is unclear, the BoE have taken these steps to stimulate the economy and support struggling businesses and banks.
At the time of writing (11th March), Europe is leading a market recovery with the FTSE 100, DAX (Germany) and CAC 40 (Paris) all opening positive on the rate cut news. These changes in a matter of days demonstrate the importance of staying invested and limiting emotive investing.
As always, BAM continue to monitor local and global events closely to ensure that the trust you have placed with us is merited.