Unless you have been hiding under the sofa for the last few days, you will have seen that another COVID variant (Omicron) has surfaced. This has caused a wobble in markets, and at time of writing the FTSE 100 index is hovering around 7,100.
Whilst this is a relatively sharp drop week on week, markets in general have performed well this year so far. Equities alone have had a fantastic year, outperforming other assets classes and those with decent equity exposure in portfolios have seen great returns.
When it comes to COVID, there are positive signs. The waves appear to be becoming less pronounced amd peaks are generally lower than they were 6 months ago. Despite that, the Omicron variant looks like it may supersede the delta variant in terms of how infectious it is. The main unknown and therefore main worry here is vaccine effectiveness. Yes, in UK & Europe we are a highly vaccinated population, but in other large markets (for example Vietnam, which is a manufacturing powerhouse) the levels are still low, and with the world aggregate only around 40% vaccinated we are nowhere near global herd immunity. There still therefore remains a risk to economies.
We can expect uncertainty to remain for the next few weeks, but ultimately, we will learn to live with COVID and medical / scientific innovation will continue. Equities remain the best long-term asset class to deliver returns for investors, and as I always say, its ultimately a balance of risk and reward, and therefore we will always see volatility, COVID or no COVID !
Timing the market is an impossible job, and you run the risk of buying high and selling low. Therefore advice is to remain invested and remember the time horizon that you targeted when setting up your portfolio.