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Moderating the Impact of External Factors on your Investments (COVID-19)

The financial impact of Covoid-19

At Hallam Jones we continually choose to partner with firms that seek to moderate the impact of external factors on your investments be that KiwiSaver, Superannuation, Portfolios, UK Pensions or Australian Superannuation.

You will be aware of the COVID-19 challenge the world is facing from the somewhat inexplicable demand for toilet paper to the impact on domestic & international travel, spending & eating habits and trade.

For over a decade we have worked with NZ Funds who have over three decades of experience in investments. Collectively our view is that clients should maintain their portfolios which were developed with their requirements in mind.

However NZ Funds has taken additional steps to protect clients’ global growth assets.

- They have hedged 50% of clients’ share market exposure in both the Inflation and Growth Categories. This is broadly equivalent to having 50% of each category invested in cash.
- Of the remaining 50% exposure that is not hedged, approximately 30% is invested in New Zealand shares that are backed by well-established local companies which provide strong dividends.
- The final 20% is invested in global shares and overseen by specialist fund managers who have the tools and instructions to seek to moderate any further downside, should it occur.

So if markets fall further, clients will have half the share market exposure they would normally hold.

At Hallam Jones we believe this to be a better approach than having clients worry and seek to market time – by switching out of growth assets and then back in – without access to tools we have to manage volatility such as both downside and upside options.

This approach should enable clients to continue with their investment programmes in a business as usual fashion, which over the medium to long term is believed to yield the best results.