As the coronavirus pandemic continues to escalate, the consequences for the investment world are starting to take shape.
With firms and indeed whole economies shutting down, unemployment figures rising and healthcare systems straining across the globe, it is now clear to everyone that the damage from this crisis, both socially and financially, will be lasting.
Notwithstanding the real health risks of Covid-19, another compounded issue for private investors will be the financial fallout on their investments. The key question from an investor standpoint being ‘what impact will this have on the markets, and therefore my investments?’.
Whilst uncertainty still looms in the air as to what exactly that impact will be, one thing that investors do know is that this bear market currently has a stranglehold on the majority of investments and portfolios. Equities and other ‘riskier’ assets have noticeably taken a hammering, but even traditional safe havens such as gold and treasury yields have been impacted negatively.
Uncertainty breeds confusion. As such, it is both a confusing and even intimidating time for private investors, with more questions than answers. Many will have already made decisions in the past couple of weeks on whether to stick or twist with respect to their holdings and investments. If twisting, what have they sold or liquidated? What are their expectations for the coming weeks and months on how long the crisis will last? When will the ‘bounce’ happen? How stark will that bounce be? Have their attitudes towards investing in general changed as a result of the crisis?
Research in Finance launched an omnibus study in July 2019 among UK Private Investors, called Private Investor Pulse, with the aim of providing a quick and cost-efficient approach to help answer the most pressing topical questions amongst this audience. Some questions, such as confidence in the UK economy (see chart below) and attitudes to risk, are asked in every wave of the study, in order to be able to track sentiment on an on-going basis.
The latest study was conducted 2nd – 11th March, just before the FTSE 100 suffered its biggest one-day fall since 1987. Specific questions asked included what the perceived impact of the coronavirus would be on the market and whether investors had made / were likely to make any changes to their portfolios.
With the next wave of research set to launch in early May, this is the perfect time to provide a steer on how sentiment and portfolios have changed amongst private investors, but also ascertain attitudes towards investing for the future.
If you are interested in understanding how private investors are reacting to changes in these uncertain and testing times, please contact Richard Ley for more information.
Private Investor Pulse is an online quantitative study with 300+ private investors and runs every other month. The length of the survey is 5-7 minutes. The sample each wave meets the following criteria: