A note from our Chief Investment Officer
7IM and the Coronavirus challenge
These are tough times. We don’t know how long the economic disruption caused by coronavirus will last, we don’t know how bad it will be, and we don’t know what financial markets will do. But the 7IM Investment Team is prepared for these uncertainties.
Our investment process is designed to cope with uncomfortable and unexpected markets. The foundation of our portfolios is our Strategic Asset Allocation. It saw our clients through the financial crisis of 2007-08, and has coped with other rough patches until now.
It’s never been more important to be diversified. The impact of COVID-19 isn’t dictated by national borders or GDP – some assets that you’d expect to do well have slumped (like gold), while others such as Asian equities have been surprisingly strong compared to developed markets. We don’t rely on just one asset for growth, and we don’t rely on just one asset for protection.
Our Tactical Asset Allocation decisions have mostly been adding value, with defensive positions like US healthcare stocks and alternatives delivering exactly what we expect.
Our manager selection has mostly been adding value over and above their benchmark indices, showing that the debate over active vs. passive is not over. We have always believed that choosing the right active manager can help portfolios such as the Multi-Manager and Active models – and the current environment shows that.
We’re also ready for the organisational challenges that the current situation presents. The Investment Management Team, the Risk Team, the Dealing Team and all supporting operations teams have been preparing to work remotely for several weeks.
We’re ready for the day-to-day job, and will make changes to portfolios as necessary. We’re all in constant communication, making sure that any instructions are clear, unambiguous and with the client’s best interest in mind.