Update on Our Business Processes and Market Thoughts

At Christian Douglass Group we have been planning for every eventuality over the last few

weeks. Whilst Government policy has been fluid this was the only course of action. Now

that the direction we are being guided towards is one of minimising face to face contact, we

are implementing the plan that best suits the contradictory needs to be in touch with you

and keep at a safe distance.

Operational Plans

Every member of the team is set up to work remotely and our systems function on secure

Clouds. We have also spoken to our main service providers and established that their

operational systems are robust and able to cope with all of the uncertainty. In other words,

income and other services will continue.

I have given every member of staff the choice of how they work in the coming months as of

course their priority must be their needs and those of their families. Beyond that, it is

paramount that where possible, we are all also focused on continuing to deliver the service

and support to our clients in whatever form that takes.

Hazel and the Administration team will be working monitoring accounts and dealing with

operational tasks. Our Compliance and Finance team will ensure that we are doing

everything we can to monitor developments and ensure that as a Company we maintain the

highest standards. In short, our back office functions will continue unabated.

Your adviser will be available to talk as they always are. The problem of face to face

meetings is one that modern technology provides a solution to. The advisory team will

continue updating you as we normally do. Meetings in your Home, our Office or other

venues may not be possible for the coming weeks, but telephone calls, video conferencing

and email are all services we can offer. We have invested in Zoom a video conferencing

service to allow these discussions to have a more personal feel when we cannot physically

meet. If you have a meeting scheduled, you adviser will be in touch to confirm

arrangements and agree any changes to the arrangements. Upcoming meetings that are

not yet scheduled will be co-ordinated by Charlotte with a provisional date and time and

preferred method of contact.

As we are unsure of how postal systems will work, correspondence will be sent by Email for

the foreseeable future. If therefore you have received this note by post and have an email

address we can use, please advise your adviser as soon as possible.

Market Thoughts

My career started around the time of the 1987 crash and I have worked through every crisis

since. The investment world is driven by two emotions, Fear or Greed. These unsavoury

attitudes set the trend of the movement of markets; rarely are markets rational.

The managers we work with are all updating and assessing their strategies and altering

them as they see fit. Many have held higher than usual cash reserves for some time; not

expecting the drama we are seeing unfold around us, but waiting for the right time to invest

to achieve their longer term aims. Some of this money has been deployed to buy physical

assets such as Gold, whilst other elements have been used to acquire other secure lower

risk assets. There is no doubt however that this creates a massive opportunity to buy into

market weakness and without exception the managers we work with are assessing

opportunities with a long term view and investing where this is compelling.

The fact that we are receiving so few calls from our clients reflects the understanding you

have that markets react violently and will recover. A concerted effort by the G7 and other

Key Groups to support Economies is taking shape, although like Health Guidance, the

strategies are vague at the minute and changing constantly. Any positive news is met with

a Euphoria but until there is clarity over the actual support mechanisms, markets will

continue to be volatile.

For what it is worth, my view is that the most practical step would be for the promises of

“supporting every business”, to take the form of a cash injection equivalent to a period of

historically proven turnover, with those injections starting with the smallest and working to

the largest businesses. This could effectively take the form of a 25 year loan repayable to

Governments over the term. It would be a risk as businesses will sadly fail but nevertheless

the fast injection would be preferable to the issuance of Government Debt which is then

used to provide liquidity to Banks who in turn provide liquidity to Business, at a cost. Every

business could trade then through this uncertainty and use any turnover they can achieve to

support themselves as time goes on. Whether this direct approach would work or be

considered is debatable, but it is preferable to simply giving money to the Banks.

Our strategies have suffered. It is impossible to avoid reductions in value in these markets. I

know from the discussions we are having with managers that the key Core Funds are doing

their jobs by minimising the losses as much as they can through diversification. The values

of Structured Products are subdued but the only relevance is when those products reach the

end of their lives. In other words, if they have 2 or 3 years to go before maturity the day to

day encashment value is largely irrelevant.

Our satellite managers are targeted to investing those Companies offering the most suitable

opportunity for growth in market conditions. Such has been the selloff in some areas of

Markets that they have fallen in line with Indices. This is not an indication of their future

performance. Many of these managers remain confident that when this initial panic

arbitrary sell off is over, the values of many of their underlying investments will rise

strongly. They are therefore, judiciously topping up holdings from cash to take advantage of

any recovery bounce when it comes.

We are monitoring performance and the funds in general through almost daily

conversations with managers and we are fortunate to have direct access to so many of

them. This is not a comfortable period for anyone in any regard, but we expect markets to

recover in time and holding tight is a better option than trying to time exit and subsequent

re-entries to the markets. I am aware how worried everyone is both over the unknown

spread of Covid-19 and the precipitous falls we have seen. Each time we see markets fall

heavily it triggers a review of our guidance. This is based upon the expertise of fund

managers, listening to the economic outlook and projections and of course, Government

policy changes.

Your adviser is always available to discuss any concerns. If you need anything please use the

office number 0161 2366163, Email or call your adviser’s mobile phone.

David Baldwin APFS

Managing Director