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The Recovery Phase...

The importance of risk management is evident during the recovery phase of your portfolio. That is, what percentage return do you need to get, to get back to even. Having a portfolio which considers risk management an important element, should benefit you through a faster recovery, i.e. it requires a lower return to get back to even because it didn’t drop as severely.

For example, for the month of march a good growth fund which is designed to invest 80% in shares, delivered a return of negative 10%. This is compared to the ASX 200 which fell by 20%.

To get back to even, the growth fund needs to deliver a return of 11%. However for the ASX 200, it needs to deliver a return of 25%.

The following illustration may explain this point more clearly:

The path to recovery during this crisis will be a rocky one, and life going forward will not return to our previous normal unless we find a vaccine. So I'm not expecting a quick recovery, but I do expect to recover eventually. If you are a growth investor, please consider risk management as one of the most important factors when investing. Many investors will invest only in Australian shares without completely understanding the significant risks they are taking and how long it could take to recover your losses.

If you would like to discuss your portfolio, or if you simply have queries you would like answered, please do not hesitate to call our office on 02 4244 4054.

We are here to help you through this unprecedented event, and welcome open and regular conversations.


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We look forward to helping you!

P: 02 4244 4054


F: Don't be hilarious! That's way too old school!

Suite 4, Level 4, 166 Keira Street

Wollongong NSW 2500

Andrew Webb is a member of the Institute of Chartered Accountants of Australia

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Webb Financial (Financial Planning) Pty Ltd T/As Webb Financial ABN 37 622 060 422 and James Mottram are Authorised Representatives of Synchron AFS Licence No 243313 for financial planning services.

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