April saw a turning point as the world began to get to grips with the spread of COVID-19 and markets began a gradual recovery, though there were still some periods of volatility.
Many countries have eased lockdown measures and the stock markets reacted well as the loosening of restrictions lead to increased retail and business activity. We are not out of the woods yet though, and have seen a secondary increase in COVID-19 infections in some US states and in countries such as India and Brazil, where they are still struggling to contain the virus.
Our portfolios have performed well under pressure this year, and we have managed to protect capital significantly better than the market. This means that our portfolios have, largely, not seen their values fall as far as their respective benchmarks. Most have then added some growth over the last three months, building back up lost value or even exceeding their January values (based on % growth over 5 years to 3rd July 2020).
Strong, high quality bonds have been essential in achieving this performance, with our holdings in UK, US and European government bonds helping our more defensive portfolios (Cautious, Conservative and Balanced) to mitigate much of the downside in equity markets.
Of particular note have been our Ethical portfolios, which not only protected well against the worst falls, but also gained significantly in the subsequent rallies.
In the UK, we are still sceptical that a final Brexit deal will be agreed in the near-term and this could also cause significant market volatility.
We plan to keep much of our defensive positioning to protect against continued market volatility, but we remain cautiously optimistic that there will be further recovery in the second half of 2020 and beyond.
You can read our full Investment Market Review & Outlook for further details: