These are difficult and volatile times. In addition to the growing human cost and suffering, the escalating conflict in Ukraine and resulting sanctions on Russia have added a new dimension of risk to investment markets.

Under such conditions, it can be hard to stay focused, especially given that nobody knows what may lie around the next corner.

Keep your wealth invested in a diverse portfolio

In our experience, the best strategy under these conditions is to keep your wealth invested in a diversified portfolio. This is why it’s important to maintain a long-term perspective and stick to the strategy that you and your adviser have put together when you formed your financial plan.

When a client raises concerns to us, one of the first things we do to give them some peace of mind is to stress test their portfolio.

In the year to date, the FTSE All Share Index is down by 0.12%. However, it’s important to bear in mind that the lion’s share of our clients’ wealth is invested in the globally diversified IronBright 50 portfolio.

While this is down by 5.64% this year to date, due to market volatility, in the year to April 2022 it has still grown by 3.14%. This is because it contains a good mix of growth assets, such as equities, and defensive assets, such as bonds.

When stress testing your portfolio, a good starting point can be to go back to one of the biggest falls in living memory. For the IronBright 50 portfolio, this would have been the famous “Winter of Discontent” in 1972, when it decreased in value by 26.9%.

Of course, it’s worth bearing in mind that, while it fell over a period of 24 months, it only took three months to recover. If your financial plan can remain on course after such a stress test, then it can overcome short-term concerns.

A very low exposure to Russia

IronBright operates a strict asset allocation policy, which gives you access to a globally diversified suite of portfolios. Many clients have asked us, given our international flavour, if we have a large exposure to Russia. As one person put it: “are we on the wrong side of history?”

Thankfully, you will be pleased to hear that we have no direct exposure to Russia, although there is indirect exposure through several funds. These are principally in the Blackrock Emerging Markets Equity fund, in some passive portfolios, and in the Hermes Global Emerging Markets fund.

The manager in the latter fund has been actively selling anything remotely unsavoury over the past few months, whereas the former reflects the index it tracks.

The maximum amount of exposure that any one portfolio has indirectly to Russia is 0.15% in the core satellite and 0.05% in the passives. In relative terms, this is almost an entirely clean bill of health.

Our three guiding principles remain in place, and we do not veer from them. These are:

Belief in the future

We know the market will continue to deliver long-term value, as it always has.

Patience

We keep an eye on the long term rather than trying to second guess the short term.

Discipline

We hold strict asset allocations and rebalance the portfolios every six months to maintain them.

Because we stick to these principles, we are pleased to report that all portfolios are performing in line with expectations and holding up well.

Get in touch

If you’re concerned about your progress towards your financial goals and want some reassurance that you’re still on track, get in touch. Please email team@brunelcp.com or call us on 0117 214 0870.

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