Investing during turbulent period in capital markets

Today’s geopolitical situation raises many questions, so we understand your concerns and appreciate your trust. Our entire team is working intensively, with all our hearts and minds, to try to ensure that the share price movements caused by the current situation have as little negative impact as possible on the long-term growth of your accumulated assets.

Comment by Vaidotas Rūkas,  INVL’s Chief Investment Officer:

 Unfortunately, the predicted but still unexpected worst-case scenario of a military invasion of Ukraine became a reality last night. Capital markets are meeting it with restrained negativity: stock market futures in the major countries furthest from the war zone (the USA, Canada, Japan) are down about 2-3% this afternoon, while Western Europe and emerging markets are down 3-5%.

2^nd pillar pension funds are invested in a broad global portfolio, where shares of US companies make up about 40%, Western European stocks about 10%, and the Japanese and UK equity markets another 5% each. Thus, the echoes of war affect these investments indirectly. Russia’s stock market only makes up about 0.5% of global equities, and the pension funds hold a similar or even smaller proportion, indirectly, through emerging market equity funds.

Historically, capital markets have reacted to military conflicts in a sudden and vigorous but short-lived manner. Except, of course, when they had direct ties to actions in the countries at war. The Korean War, for example, which started on 25 June 1950, caused a 13% fall in US stock markets, but prices recovered in less than three months. The drop on 11 September 2001 was 11.6%, but those losses were reversed within a month. Other regional conflicts have had no significant impact. We are hopeful that the Russia-Ukraine war will not only not spill over into neighbouring countries but will itself end relatively swiftly.

Our team of fund managers, as always, is ready for action under any conditions. Some prior adjustments we made are already helping to cushion market drops. Investments in minimum volatility and value stocks in the US are helping. Investments in alternative assets like real estate and private equity also reduce volatility. We want to assure you that, in managing fund investments, we actively monitor the situation and take action as needed. We continue to work actively to successfully manage the assets entrusted to us.

For any questions you have, our consultants are on hand to provide answers. Get in touch by email to pensijos@invl.com or call +370 700 55959.

As ever ready to help,

INVL Asset Management

Get up-to-date information at www.invl.com and fb INVL