Lockdown 2.0 prompts UK wealth check

The roll-out of the UK's Covid-19 vaccination programme may have started this week, but the effects of the pandemic and lockdowns 1.0 and 2.0 are still being both felt, and assessed.

New research out this week from Barclays Smart Investor suggests that there has been an increase in the number of female and young first time investors since the start of the first UK lockdown, while the latest analysis by Aviva says that more than half of Brits (57 per cent) took action to review their savings during the second lockdown in November.

Alistair McQueen, Head of Savings and Retirement at Aviva, says: “There is little positive to be said about life in lockdown, however one silver lining is that a majority of us have used this time to review our finances. Our next goal is to make this ‘one-off-review’ a ‘once-a-year-habit’.

Market volatility during the pandemic has seen some investors retreat to cash holdings rather than keeping faith with stocks and shares. Over half (56 per cent) believe investing “is too much of a gamble” for them right now, according to research by Alliance Trust, which identifies a fear of losing money and a need to access money easily as savers' top two concerns.

But as a new study from Charles Stanley Direct highlights, losing money – or rather losing out on making money – is exactly what has happened to those who have opted for cash savings over investments, not just during the pandemic, but over the past decade.

Rob Morgan, Investment Analyst at Charles Stanley Direct, says: "Many people don’t realise that if your savings don’t grow in line with inflation, they are actually losing money. To put this into perspective, today you need over GBP1.20 to buy you the same that GBP1 would have bought you 10 years ago, but cash on deposit has typically only increased to around GBP1.10 per pound saved."

Those who do put an investment strategy in place would do well to consider responsible and sustainable investments, according to Willis Owen's inaugural annual ESG review, which says that ESG funds have outperformed their peers across major equity markets in 2020, delivering near double the returns of non-ESG mandates in the IA Global sector.

Adrian Lowcock, head of personal investing at Willis Owen, says: “2020 was truly the year when ESG funds emerged from the side-lines. The sector has shone on a global basis, with the growing number of options open to global ESG equity managers helping these focused strategies to outperform."

And finally, in our guest feature this week, David Higgins, Managing Director of Citisoft's UK Practice, is urging asset managers to learn the lessons from the global financial crisis back in 2008, as the world hopefully begins to return to normal in 2021. Retrenching and focusing on core business models will be key, he says.

"Every asset manager has an operating model that is rife with opportunities," says Higgins. "They simply need to take the time to consider what those opportunities might be. As we move into 2021 and business strategies get updated, now is the moment to do so."

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Wealth Adviser
 

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