Ukraine/Russia conflict and the risks of investor panic

We will all have shared a sense of shock and sadness when hearing of Russia’s recent invasion of Ukraine, and our thoughts and sympathies are with those directly affected in Ukraine and seeking safety elsewhere. We know you may also be questioning what impact the invasion could have on markets and on your investments, and whether you should take any action.

We don’t know how long the conflict will last or the full extent and impact of sanctions. But what we do know is that markets have historically shown a long term resilience when it comes to coping with more extreme global events.

So in times of uncertainty, the best plan is often to do nothing at all – particularly when you are investing for the longer term.

What should you do?

Probably the worst thing to do at a time like this is panic – either by panic-selling or panic-buying, for that matter – for investments, as with anything else.

While it may be uncomfortable at times, sticking to your long-term financial plan would normally leave you better off in the long-run than switching tack. Remember, unless you plan on permanently abandoning the stockmarket, you will at some point be buying back in, quite probably at a higher price. The moment when you feel comfortable enough to do so is unlikely to be when share prices have fallen further, but rather when they have recovered.

The recent bout of volatility is a reminder too that diversifying your investments across different types of asset can help insulate your portfolio.

As ever, M&G’s fund managers remain resolutely focused on their longer-term objectives. By ignoring the market noise and focusing on the fundamentals, they look to actively manage risks and capitalise on the opportunities thrown up in choppy markets like we are seeing.

Please bear in mind that M&G are unable to give financial advice. The views expressed here should not be taken as a recommendation, advice or forecast.

The value of any fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.

Questions and answers

How much exposure to Russia and Ukraine do you have in your investment portfolios?
Our exposure across the various investment teams within M&G plc is very limited: less than £0.5 billion across all our internal and external client portfolios combined. This is a fraction of our total assets under management which stand at £370 billion (as at 30 June 2021).

Which investment teams manage most of your exposures to Russia and Ukraine?
M&G has investment teams specialising in emerging markets, investing in both debt and equity. Russia is a big emerging market economy, alongside other countries such as Brazil, India and China (BRICs), therefore historically making it an important part of any global investor’s emerging market portfolio.

Where Russia is held in emerging market debt or equity funds available to external investors, such as the M&G Emerging Market Bond Fund, the exposure sits at single digit percentage points of each funds’ net asset value.

Will sanctions directly affect your holdings?
We don’t yet know the full magnitude of sanctions, so it isn’t possible yet to assess their impact.   But as an international asset manager, we will comply promptly and fully with sanctions where they are imposed.   

Are you seeing any increased risk of cyber threat?
We are always alert to cyber threats, and have an experienced team monitoring activity of this nature.

What do I need to know?

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