Coronavirus (COVID -19) – The impact on your investments

If you hold an investment of any kind or pension, you are likely to have some money in the stock market and over the last week you will have seen a dramatic fall in the value of your pot. The FTSE 100 has fallen faster than after the global financial crisis over a decade ago, and much faster than after previous shocks. Many companies have been unable to avoid these falls which will likely affect many who hold stock market investments via their pension or ISA.

The coronavirus pandemic has also seen 11 major UK property fund suspensions take place so far; it is estimated that investors have a total of £13.6bn trapped in various funds. Many people choose to invest in such funds, where a professional manager collects money, then invests it directly in property or in property shares.

Action in times of uncertainty like this is crucial; Financial Conduct Authority rules require property fund managers to consider suspending funds during extreme market conditions. Reports suggest managers want to protect customers, ensuring that they do not make payments where they are unsure of the value of their underlying assets, however many investors will be more concerned about the money that they have already paid in.

Despite this, even those invested in low risk funds could be heavily impacted. Many people will be hoping that if they continue to hold on to investments they will recover in the future, once the coronavirus pandemic is over. The problem with this is that investors that have placed a stop-loss on their investments or advisors/fund managers who have done this on their behalf will not have the opportunity to recover the losses.

A stop-loss can be defined as an advance order to automatically sell an asset when it reaches a particular price point. It is used to try to limit loss (or in other cases gain) in a trade. The concept can be used for both short-term and long-term trading. This is an automatic order that an investor places with the broker/agent by paying a certain amount of brokerage. It is also known as stop order or stop-market order.

The problem with stop loss during the corona pandemic is that almost all investments are likely to have experienced a significant loss, even those invested in low risk shares/funds, which could trigger the automatic stop loss.

Investors may potentially be able to try to recover some of these losses, however this would involve buying back the shares that are sold under the stop loss while the shares are still at a low price and then waiting for the price to potentially increase. Some investors may not even realise there is a stop loss on their investment meaning they have incurred losses without knowing they will not have the opportunity to recover these losses.

If you think you may have been mis-sold an investment and were not made aware of the risks of your investment our specialist Banking and Finance solicitors can assist you with an assessment of your potential claim and advise you on the best option for seeking damages or compensation.

If you would like to explore the possibility of making a claim please call William Fox Bregman on 01202 057740 or Kirsty Handyside on 01202 057738 for a preliminary review of your potential claim. Alternatively email William.foxbregman@ellisjones.co.uk or Kirsty.handyside@ellisjones.co.uk