Advisers formulate coronavirus portfolio rebalancing battle plan

Claire Tyrell reports...

Advisers are telling their clients to prepare for a “lean year” of investment returns and are providing guidance on how to rebalance their portfolios to best survive the coronavirus crisis.

West Riding Personal Financial Solutions managing director and IFA Neil Liversidge on Tuesday (17 March) wrote to clients explaining how they could use the current crisis as an opportunity.

“Stand-out opportunities created by major events do not happen very often, but when they do, we try to use them to your advantage. With your permission, therefore, we propose using the opportunity coronavirus has created,” he said in the letter.

“The FTSE100 is now heavily down from its all-time high. That fall means dividend yields are looking much more attractive on an all-market view. Some companies will cut their dividends in the coming months, but in all the years I have been investing, it has never been a bad decision to buy when dividend yields have been relatively high.”

Liversidge’s firm gave its clients the option of rearranging their portfolios by selling defensive low-equity consent funds and buying the Vanguard UK Equity Income Fund Index – currently tracking at a historic yield of over 6%.

“Once this is done, we’ll sit tight for the recovery in the UK market once everyone stops flapping and realises the world isn’t ending. Once the market has recovered, we shall then look to rebalance your portfolios again as appropriate,” Liversidge said in his client correspondence.

Independent Wealth and Pensions Chartered financial planner Ricky Chan (pictured), in the midst of issuing client reports, said as well as stopping face-to-face meetings, his firm was reassuring clients to stay calm.

“Our advice is stay calm, hold investments (or) rebalance, defer large capital withdrawals, prepare for a lean year, invest surplus money in the depressed markets for better long-term growth,” he said.

He added: “For those in drawdown, they’ll need to be more mindful of their expenditures.”

OpenMoney chief executive Anthony Morrow echoed Liversidge’s sentiment that “current market volatility may be a good opportunity to invest more” but to have enough cash to get them through the next few months.

“We’d normally suggest that investors avoid trying to second-guess which regions and sectors will come out best and instead spread risk with a globally diversified portfolio. And before committing any money to long-term investments we advise people to make sure they have enough easily accessible cash to cover essential expenses for at least three months,” he said.

“Investing should not make people worry, so you should only invest when it won’t keep you awake at night. In the current circumstances, these rules of thumb have never been more important to follow.”

Chapters Financial director and Chartered financial planner Keith Churchouse said his firm was preparing a newsletter to reassure worried clients.

He explained: “We live in a fluid period of evolution with regards to Covid-19. We have first made sure that the team are safe and have all they need from Chapters Financial as an employer. We have also checked systems to ensure that all can work from home where needed.”

“Clients have been fully understanding of the need to switch from face-to-face meetings/contact to telephone and email communications. Our more vulnerable clients have usually maintained good contact with us through phone and email anyway and this will remain unchanged.”

Chapters is preparing its client newsletter for April with a view to reassuring concerned clients.