06 March 2020

Navigating the coronavirus crisis

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Trevor Greetham, Head of Multi Asset at Royal London Asset Management current views are the following:

We expect a short but deep shock to the world economy caused by reversible containment measures intended to slow the spread of the virus. There are parallels with previous geopolitical shocks such as the 9/11 terrorist attacks and the Iraq War which created sudden but short-lived contractions in activity. The shock is ultimately temporary and in its aftermath growth will be stronger than otherwise due to pent up spending, the positive effect of additional stimulus and the need to rebuild depleted inventories caused by factory closures. 

“Our intention is to come out of the crisis with a large overweight in stocks when the time is right, but to demonstrate sensible risk control in the meantime.

Volatility could remain elevated for months, with bouts of selling followed by sudden rebounds. Markets tend to over-discount bad news in the short term and this will create opportunities for active investors willing to buy the dips and sell the rallies. We bought global equities during the initial deep sell off when investor sentiment was extremely pessimistic and lightened up exposure again in rebound after the US Federal Reserve cut interest rates. 

“We expect the outlook to remain highly uncertain for the next few months and we will continue to monitor the situation closely and adapt our portfolios accordingly. In the longer term, we expect the coronavirus shock to be seen as a temporary interruption in an extended period of low inflation, positive economic growth and rising stock prices.”

-ENDS-

For further information please contact:

Margherita Orlandini, Corporate PR Manager, Royal London

About Royal London Asset Management (RLAM):

Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.

RLAM manages £139 billion of assets and employs 113 investment professionals as at end July 2020. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.

For professional clients only, not suitable for retail investors.

Issued by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.

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