Lessons for market volatility

Hi, I'm Stephen Anness,

Head of Global Equities here at Invesco in Henley.

I just wanted to provide a bit of an update, given

the market volatility that we have seen in recent days,

to give you all views

and to tell you how we're thinking about it as a team.

I think the first thing to say is that

clearly there's volatility in the news flow

that we're seeing around tariffs.

And the potential retaliations are quite unnerving for investors.

And we've seen markets react to that.

Markets hate nothing more than uncertainty.

And we have an awful lot of uncertainty at the moment.

It would be impossible for me to stand here

and tell you that we know how this is going to evolve.

However, what I can tell you is what we're doing about it as a team.

We've seen many periods of volatility before.

As a team, we've lived through the GFC.

The COVID period, Industrial recessions in 2015 and 16,

and of course the European Debt Crisis in 2010 and 11.

And through those periods, we've remained consistent

in the way that we approach this kind of volatility.

So what are we doing about this as a team?

Well, firstly we're focusing on the long term.

We're trying to invest on a 3 to 5 year view.

And we're trying to find the best companies

with the best management teams

that we think could be substantially bigger over that period of time,

where the valuations are really quite attractive.

Secondly, that we have to retest our investment thesis.

There are clearly companies which will be impacted by the news.

And there are also companies, though,

which may be advantaged by this news,

where they don't perhaps have a direct tariff impact.

And finally, we're concentrating

our capital in our very best ideas.

This market has thrown up a number

of really exciting opportunities in businesses that we really like.

And so what we're doing is we're going line by line, company

by company,

trying to find the best opportunities that we can

and make sure that the portfolio

has sufficient allocation of capital toward those opportunities.

So clearly there are a number of things for us to consider.

Firstly, there are the first order impacts of the tariffs.

Which companies are impacted by them directly

and which companies may even be advantaged by them.

Secondly, though, we do need to consider

the second order

impacts of this,

there will be economic consequences to this uncertainty.

Companies will likely delay investment spending.

They may well change their hiring plans as well.

And so we're likely to see, I think, a slowdown

in the results of many companies in the coming period.

So what we've been doing is reallocating our capital

within the portfolio.

We have a number of companies

which have performed actually quite well during the initial phases

of this market volatility,

and we've also seen some where we think the share prices have perhaps

fallen further

than is really likely to be the impact of what we're seeing.

And so we've been steadily reallocating capital within the portfolio.

As I mentioned at the outset of this video,

we have seen a number of periods of volatility before, and often

that volatility has come

with what appear

at the time to be, frankly, very scary headlines,

which is what we're seeing at the moment.

The key point that

I'd like to make is that in all of those periods of time, volatility

has created opportunity

for us as active fund managers to deploy that capital into the fear

and ultimately

try and find those opportunities

which are likely to generate

good returns for our clients over the years ahead.

It's important to note that, as I mentioned, none of us know how

this is likely to pan out,

and therefore what we are trying to do is build a portfolio

of resilient, growing companies run by excellent management

teams that we think can perform in a number of different scenarios.