Covid-19 has had a dramatic impact on financial markets, with many forecasts suggesting that the global economy will endure a serious, but hopefully short lived, recession. With the downturn in the economy, where large segments are essentially halting manufacturing or providing services, we are seeing aggressive action by policymakers.
For investors, there is a recognition that policy will not prevent the downturn, but only mitigate its effect to some degree. While the downturn will be painful, markets may already have moved a long way to discount the bad news to come on the economy and on corporate profits.
The impact on individual investment funds varies, for several different underlying reasons. For example, in line with FCA requirements, some property funds have temporarily suspended trading to protect the interests of all investors following their independent valuers declaring ‘material uncertainty’ regarding the valuation of the underlying property assets. These suspensions are not related to liquidity, but rather to the difficulty of placing an accurate valuation on properties in the current climate, due to potential economic impact, as well as the ability of valuers to physically visit properties to value them.