The war in Ukraine and financial investments

As we come to terms with the invasion of Ukraine, the following update is to provide a financial perspective to our clients and an insight into the war in Ukraine and financial investments.

At the start of this year, we fully expected a “bumpy ride” over the following 12 to 24 months as one set of challenges (COVID 19 and Brexit) seemed to be coming to an end only to be replaced by a new set (inflation, rising interest rates and Putin). World events move quickly and Russia’s outrageous invasion of Ukraine means Putin will now dominate the news agenda for months to come.

If you have any concerns whether your Innes Reid portfolio is invested in Russian assets, the answer is no; our exposure to Russia is nil in the vast majority of our client portfolios and negligible in a very small number of higher risk portfolios.

Our role is to provide a financial perspective on how these dreadful events might impact investors. In the short term at least, the outlook is challenging as markets tend to react to uncertainty with volatility.  At the moment, markets seem to be holding their nerve and we have not experienced the steep falls we experienced in early 2020 at the onset of the coronavirus pandemic. However, things could get worse before they get better.

Sanctions against Russia are increasing and there has to be some rebound effect as they respond in kind. We will have to get used to higher fuel prices for a while, adding to our existing concerns over inflation. In the longer term this has to lead to significant government investment in green energy to break Europe’s dependency on Russia for its fossil fuels.

The prospects for an ending to Quantitative Easing and rising interest rates have reduced as a result of this new threat and this creates a different economic landscape than we were expecting. The uncertainty has also accelerated some investment trends such as the apparent rotation from ‘growth’ style investment to ‘value’ style. We are monitoring all these developments in our portfolios.

Under the circumstances, it may appear callous to write about possible positive economic outcomes but our role as portfolio managers and financial planners is to navigate through the negatives and positives, keeping you on track to meet your financial goals.

Challenges and volatility are an ongoing part of the investment process and, as always, we continue to focus on the long-term goals.

The war in Ukraine and financial investments – We hope you have found this market update informative. We will continue to monitor the situation and communicate with you. If you have any questions at this time, please do not hesitate to get in touch.

We are always here to help.