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2020 Performance Update – Positive returns in a difficult year

How did our Plans perform in 2020?
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This past year is one for the history books. There’s been nothing like it in living memory times, with every country impacted in more ways than one as a result of Coronavirus. It’s difficult to look at this year objectively regarding market performance, especially considering the human impact and the heavy toll it has taken. Our thoughts remain with those affected by the virus and the heroes working on the frontline.

However, despite the challenging times we are heartened to report all our Plans posted strong gains for the year. We’re proud to confirm that our top performing Plan has now grown by over 47% in less than 5 years!


2020 performance figures
The table below shows our simulated* 2020 performance figures for both Original and Ethical Plans - please note that the data to calculate performance (below) uses the end of day prices. To capture the performance of the full 12 months, we’ve started with the end of the previous day (31/12/2019).

All Time Performance
The graphs below show the simulated* performance of our Plans since they started, after all fees have been taken.  We regularly update our performance numbers on our ‘How we invest’ webpage.

Figures in this blog are based on past performance and past performance is not a reliable indicator of future results.

How the markets performed in 2020
In our Plans, the key stock markets that contributed the most to our 2020 returns were Emerging Markets (EM), Asia Pacific Ex-Japan (APXJ), the US, and Japan. Unfortunately, the continued uncertainty surrounding Brexit continued to weigh on UK equities prices, although we expect this to lessen going forward. The initial resolution of Brexit negotiations with the EU, now means the UK will broaden the focus of trade negotiation to countries outside the EU where there are no trade agreements in place[1]. Perhaps most importantly, the UK avoided a hard Brexit, although this news saw the UK Pound strengthen somewhat weighing on overseas asset prices.

Looking at share market performance what is most striking is the rapid decline seen in February and March, was followed by the bursts of confidence that saw the US, Japan, APXJ and EM all finish the year higher than they started it. The economic impact of tighter Covid restrictions weighed heaviest on the UK and Europe who did not recover quite as well. While politics saw much friction in the start of the year, the markets’ focus was Covid-19. As the situation worsened markets moved sharply lower, sentiment was initially boosted in March 2020 due to the strength of governments and central bank policy responses. The successful vaccine trials and roll-out saw a further boost through Q4 (from October to December).

The year also saw greater focus on ESG, as vox populi, institutional and government focus grew especially on focused on climate and social change. One of the additional areas of support for our Ethical Plans was their minimal holdings of fossil fuel companies or airlines as both these sectors saw a difficult year.

The Wealthify Approach
At Wealthify, our dedicated Investment Team work tirelessly to optimise the performance of customers’ Plans. We use technology to increase the efficiency of our decision-making process and have a powerful suite of analytical tools, which helped keep a watchful eye on markets throughout 2020 – in particular, they provided early warnings on economic, political, and market changes.

Our philosophy is to look at medium to long-term trends in the market, focusing on making the right decisions about the mix of investments we use, and the regions we invest in. We do not choose particular stocks, and believe that the best approach is either using funds that track the wider stock market for our Original Plans or using specialist fund managers to ensure our Ethical Plans due diligence is as comprehensive as you would expect. You can read more about our fund selection process here. This worked well for us last year and, whilst customers did see periods of turbulence in their Plans, our 2020 performance figures show that a patient approach does pay off. You can read more about our investment philosophy here.

Cautious optimism  
2020 proved to be one of the most eventful years in markets ever. While we remain cautiously optimistic about the outlook for financial markets, this does not mean we are complacent. We continue to pay attention to the potential risks and opportunities ahead. While 2020 has proven that no-one has a crystal ball, we have a discussion of what is particularly on our radar for the coming year in this blog.

Whatever happens, you can rest assured that the Wealthify Investment Team will be working hard for you to optimise the performance of your Plan. We’ll keep in touch about any changes we make to your investment mix, and you can check how your Plan is doing, day or night, with the app or on the website. We hope that you are as delighted with our investment results as we are and that you will continue your investment journey with us for years to come.


* ‘Simulated’ returns are so named as they are based on the performance of a model which identically mirrors the decisions we take on customers’ Plans. It is based on an account size that is over £500 and assumes that our maximum Wealthify fee of 0.60% is taken, as well as underlying fund costs. Individual customer returns may deviate slightly from the model figures, particularly those customers who may have added to or withdrawn from their Plans throughout the year or have a different fee rate.

[1] https://www.gov.uk/guidance/uk-trade-agreements-with-non-eu-countries

Please remember the value of your investments can go down as well as up, and you could get back less than invested.

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