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Ukraine Crisis

As the Ukraine crisis continues,  it is time to reflect upon the nature of this crisis and the effect on investments and pensions.

First and foremost, we absolutely should pause and give thought to the terrible human suffering endured by millions of people in the region of Ukraine and surrounds.  This is a heartrending humanitarian atrocity and nothing should distract us from that fact.

It is very important to separate events in the world from the markets.  Often the news is dire and the situation looks bleak whilst the markets are performing well.  The opposite is also sometimes the case.  This is because the markets are forward-looking as far as they can possibly be.

This crisis has been well flagged and well anticipated.  The rhetoric and build-up of forces over a long period has allowed markets to ‘price in’ this risk long ago. Certainly rising gas and oil prices, the prospect of rising inflation and possibly rising interest rates had dampened the markets.

To compare and contrast with the Covid crisis of 2020:  in just over two months the FTSE 100 fell by over 32% as the virus was largely unanticipated; since 11 February this year the FTSE 100 has fallen by a maximum of 8.8%.  Clearly most portfolios are invested with a global element as well and this can and has been more volatile at times.

But in reality, aside from the appalling nature of this crisis, what is happening in the markets is entirely normal.  It was Harold Macmillan who when asked what was the greatest challenge for a statesman replied ‘events dear boy, events’.  Events keep on coming year in year out.  Be it Covid, the credit crunch, international crises or the Ukrainian war, events will always impact on the markets and there will always be peaks and troughs.

All of our clients have their funds invested for the medium to long term and understand that there will be fluctuations in value and sometimes in the short term, quite significant ones.  They will be up and they will be down and as long as funds are not withdrawn, a fall in value is not a loss.  A loss is realised only when funds are withdrawn.

Legendary investor Warren Buffett is quoted as saying: ‘the stock market is a wonderfully efficient mechanism for transferring wealth from the impatient to the patient’.  Sadly, Invest Southwest has had a small number of clients in the past 15 years who have insisted upon putting money in cash when the markets have dipped and the news is dire.  This has always been against our advice and has always without exception resulted in the client losing out.

In the case of the Covid market fall, within three months it had recovered by 25%.

The advice of Invest Southwest to clients remains as it ever is: if your circumstances, objectives and attitudes have not changed since the last time you received advice from us, then our advice remains to stay invested as you are.  If your situation has changed and you need funds out for your own personal circumstances or if your attitudes have become significantly more cautious or totally risk averse then of course we recommend you urgently revisit how your finances are organised.

Other than that, the Invest Southwest annual review process (or more frequently if you so desire) will pick up any changes to your circumstances, attitudes and objectives and will also assess the investment model for the spread of your assets combined with looking at individual fund performance.  Any changes will be made then.

Don’t forget there are two kinds of investor: those who don’t know and those who don’t know they don’t know.  Nobody knows what is going to happen in the markets from this second on.  The future is uncertain to us all.  Anybody who tells you they know what will happen in asset values in the future needs to be given a wide berth. They are either delusional or a charlatan.

At Invest Southwest we ensure we know our client well and we apply the science of spread portfolios with regular rebalancing.  However new and dire world events may seem, the markets are performing as they normally do including with some sharp short-term fluctuations.  As long as one’s investment horizon is medium to long term this should be of no concern.

Do of course note that performance is no indication of future performance and the value of units can go down as well as up.  History has shown markets usually bounce but as noted above no one knows what will happen in future.  All we can do is apply the science.

History also shows that the markets are where greater potential gains (than those possible in cash or deposit accounts and inflation too) are available.

I am delighted to say that in the 15 years of Invest Southwest’s existence our clients have benefited from exceptional performance well above those benchmarks noted above.

If you have any questions or concerns please do contact your adviser or our head office in Taunton where we will happily help you.

Friday, 25th March 2022


We would like to keep you updated on the unfolding Russia-Ukraine crisis and ensure there is an open dialogue between your financial plan and the impact of the current situation on your investment portfolio.

The current tragedy in Ukraine will see many lives lost on both sides. It will also have a much wider impact for the rest of the world. Strong sanctions are being imposed on Russia by governments around the world and financial markets across the globe have felt the affect in terms of uncertainty and consequent volatility.

Events are moving very quickly but we have provided a summary of the sanctions that have been put in place against Russia:

  • Many Russian banks have been cut off from the SWIFT international payments system.
  • Russia's central bank had its assets frozen limiting their ability to support the Russian ruble
  • The ruble has fallen over 20% and to support the currency they raised interest rates from 9.5% to 20%
  • Russian aircraft including private aircraft owned by Russian oligarchs have been banned by many countries from flying in their air space.
  • Oil and gas have so far been excluded from sanctions but paying for supplies may be difficult. In any event, it seems Russia has cut supplies and shipments through the Black Sea ports.

How will this impact your portfolio?

The effects of the crisis have been fairly pronounced as stock markets have fallen indiscriminately followed by some pronounced rises. Invest Southwest continue to favour high quality companies we believe will continue to outperform over the long-term. Whilst these may have fallen in price in the short term, the fundamentals of these businesses remain strong.

We are monitoring this situation closely and are keeping a close eye on events as they unfold, their impact on markets and subsequently, your portfolio. Given what we do know, we recognise the need to remain calm and focus on the benefits a long-term approach to investing and managing short-term volatility.

If there are any further developments, we’ll be sure to let you know, but for now we hope you find this touchpoint useful.

Thursday, 3rd March 2022


Financial markets have experienced a nervy start to the year, with most asset classes being impacted by the reality of higher near-term inflation and a potentially altered path for interest rates. However, market uncertainty has been exacerbated in recent weeks by the growing tensions and now conflict between Russia and the Ukraine.

Aside from the worry regarding the conflict itself (let us spare a thought for the terrible suffering occurring amongst millions of people), the disruption in energy markets is adding complexity to the inflation debate and, in turn, the actions from central banks in terms of alterations to interest rate policy. 

We continue to keep a watchful eye on markets that have been reacting to the evolving situation with significant drawdowns, which have been witnessed across all global equity markets. Unsettled periods such as the one we are currently seeing will often tar many businesses with the same brush, irrespective of their specific exposure to any particular threat or risk.  

Volatility, whilst uncomfortable in the short term, enables investors to participate in any subsequent recovery over the long term. This has always been and continues to be our consistent message. We remain vigilant to any further changes in the economic and geo-political environment that may prompt action but balance this with a long-term investment perspective.

We will get more details of sanctions as the next few days progress. For now, trading short-term moves may be dangerous as markets may well over-react and if dealing in funds, it is not known where the markets will be by the time they trade.

It is very likely this will be felt across almost all asset classes. For example, earlier this morning (Thursday 24th), the initial market reaction had seen a 6% rise in oil prices and Eurostoxx 600 equity index was down 3.5%, S&P 500 futures was down 2.0%, 2.7% on the Nasdaq and the FTSE 100 was down 2.7%. The Russian MOEX index was down nearly 30%, reflecting the damage from sanctions and the impact on, specifically, banks. Government bonds were rallying with US Treasury 10 year up 1% (yield down 12bp).

During these challenging times it is important to remember that we are investors for the long term and whilst it is uncomfortable to watch negative market action, we should not lose sight of the long-term investment thesis and not react in a knee-jerk fashion to short term macro influences

Friday 25th February 2022