Are you feeling concerned about your investments? We've sat down with Wesleyan's Director of Investments, Martin Lawrence, to get answers to all your burning questions.
So far in 2022, across the markets, everything seems to have gone down. Why is that?
Bond markets and equity markets often move in different directions, but 2022 has been unusual in the sense that both markets have fallen - with bonds actually falling faster than equities. The common factor has been the rise in interest rates, which has hurt both. However, if interest rates start to fall in the medium term, bond returns will start to look more appealing again and our Fund Managers and Analysts are already starting to look more broadly at opportunities across equities and bonds.Is there ever a good or bad time to invest?
It’s very difficult to perfectly time your entry and exit from global investment markets, which is why we take a much longer-term approach to investing to give our funds a better chance of creating returns. The best way forward will be based on your individual circumstances. We would recommend you seek financial advice from a Specialist Financial Adviser from Wesleyan Financial Services to understand the best approach for you.How does Wesleyan still obtain diversification in their portfolios when market conditions are down?
Despite falls in both bond markets and equity markets in 2022, we diversify our portfolios by investing in a wide variety of investments across different sectors and geographies to ensure we are not overly exposed to any one area.Fixed interest returns have been disappointing recently. What is the best way forward for me considering the current market conditions?
Fixed income investments have been hurt by rising global interest rates, which has caused their performance to be disappointing in 2022, but makes their future returns now look much more attractive. If you're weighing up your options, it may help to get financial advice from a Specialist Financial Adviser.Where is the safest place to put my money in a time of crisis?
It depends on your investment goals and what you want to use the money for. You should, in the first instance, get some financial advice. Speaking to a Specialist Financial Adviser will help as they are best placed to look at your individual circumstances and work out what your long-term investment goals are.
I have a With Profits ISA, how does smoothing work when the markets are in turmoil?
A process known as ‘smoothing’ is built into a With Profits Fund and is designed to iron out the peaks and troughs of volatile markets on fund performance - holding back returns when market performance is strong, to support returns when the market experiences losses.
I have heard that difficult environments are where the best opportunities can be found, why is this?
The further prices fall, during periods of heightened market uncertainty, the greater the opportunities that become available to Fund Managers such as our own. This allows them to make purchases at better prices to generate potentially higher returns for our customers
With interest rates rising, I can now get higher interest on my savings in a deposit account for example. Is this a better option than long-term investing?
Cash savings accounts typically offer shorter term returns on your money, whereas our investment funds are designed for longer-term investors with the potential for long-term returns. The best way forward will be based on your individual circumstances. We would recommend you talk to a Specialist Financial Adviser to understand the best approach for you.Am I at more risk being in a low-risk fund in times of a market downturn?
Lower risk funds typically contain a higher mix of fixed income investments. These have historically been less volatile than stock market investments - but in 2022, unusually sharp rises in interest rates have caused the prices of fixed income assets, such as government bonds and corporate bonds, to fall. However, unless a company (or government) defaults on their bond interest payments, then given time, returns for lower risk funds will still come through.
It’s pretty scary to see my investment drop, and I know the market can go down as well as up, but what is the best way to look at this if I want to remain invested?
Our investment funds are designed to perform over the longer term and look through the 'noise' caused by short-term market volatility, so it’s important to keep your long-term financial goals in mind. The best way forward will be based on your individual circumstances. If you are overly concerned, get in touch with a Specialist Financial Adviser. As always, we continue to act as responsible guardians of your money.
Are my investments at risk if the UK goes into a recession?
Recessions are where an economy shrinks rather than grows. The severity of the recession would dictate how big the impact could be. A mild recession, where unemployment remains low, would not typically have a material impact.
Are equities still the best place to invest for the most gain longer term?
Longer term, we stand by equities, alongside commercial property, as the area most likely to generate good investment returns - though the returns available on fixed income assets have recently become much more attractive than they have been in recent years.
I would normally consider myself a moderate investor but, with so much uncertainty in the world at present, why should I continue to risk investing now?
Most investments come with a degree of risk attached, but we design our investment strategies to generate good returns over longer time periods as we take advantage of the uncertainty. When markets fall, we look for opportunities to make purchases at cheaper prices in order to generate better future returns
Why should I remain invested with Wesleyan?
Is Wesleyan a safe place for me to invest in times of market downturn?
With all the uncertainty surrounding markets, and given that markets have fallen significantly, what reassurances can you give me?
Please note that past performance is not a reliable guide to future performance and the value of your investment, and any income can go down as well as up, so you could get back less than you invest.