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Fidelity - Understanding market volatility

Markets are going through major turmoil as the world experiences the impact of the COVID-19 pandemic, but this is not the first time we have experienced such heightened volatility. Fidelity have provided a series of aids and interactive tools to help you understand why a long-term approach to investing is important.

A long-term view of equity markets

What has been the progression of equity markets over the last 30 years?

Our interactive chart pin-points those significant events that had a negative impact on markets but, also demonstrates that these were short-lived dips in the stock markets.



When doing nothing is best

"Time in the market, not timing the market"

The volatility that equity markets often experience can be understandably unsettling for investors. However, sharp falls tend to be concentrated in short periods of time. Similarly, the biggest gains are often clustered together. It is also quite common for a large gain to follow a big fall (or vice versa).


Accordingly, an investor who tries to anticipate when the best time is to invest runs a very high risk of missing the best gains. This can have a big impact on their long-term return. In our regularly updated 'When doing nothing is best' sales aid, we analyse the average annual return from the UK stock market over the last 15 years. Click here to read.

Putting time on your side

What impact does the holding period have on your investment?

Investing in equities can clearly be very rewarding. Over a short-term investment horizon you can gain a lot – but also lose a lot. That’s why we recommend investors take a long-term view. Indeed, if we look back at market returns since 1990 it can be seen that an investor who stayed invested in the UK equity market for at least 12 years (11 years in the case of global equities) would have made money over any period.


In our regularly updated 'Putting time on your side' sales aid, we look back over the last 25 years to see how you would have fared by investing the UK and international stock markets. Click here to read.

Managing investments in uncertain times

Looking after your client’s investments, especially during times of market turmoil, can be challenging.


In our ‘Managing investments in uncertain times’ sales aid, we look at how to understand volatility, the importance of keeping a cool head, the benefits of diversification and why regularly investing can help smooth out returns during the ups and downs of market performance. Click here to read.



March 2020

Please note that these are the views of Fidelity International and should not be interpreted as the views of RL360.


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For more information about Fidelity International visit www.fidelityinternational.com/






Author

Fidelity International

March 2020

Please note that these are the views of Fidelity International and should not be interpreted as the views of RL360.

360 fund links

A range of Fidelity funds can be accessed through our guided architecture products Regular Savings Plan, Regular Savings Plan Malaysia, Oracle, Paragon, Quantum, Quantum Malaysia, LifePlan, LifePlan Lebanon, Protected Lifestyle and Protected Lifestyle Lebanon, and also through our PIMS portfolio bond.