Top 5 investment learnings from 2020


Perpetual Private Insights

printer icon Adobe PDF icon

We asked five of Perpetual Private's investment experts what they learnt from investing in 2020:

1. Risk is always present in markets

Andrew Garrett – National Investment Specialist – Perpetual Private

2020 has been a reminder for me after more than a decade where markets have been relatively calm and buoyant. While the COVID-19 crisis is unique in our lifetimes, the market downturn that has accompanied it isn’t – in fact, history has shown we can expect something similar every ten years or so. The reminder then, is that risk is ever present and just because you haven’t seen it, doesn’t mean it has gone away. It’s the reason we have insurance and it should always be considered in investing.


2. Prepare for the unexpected – however unlikely it may seem

Sarah Fox – Research Analyst – Perpetual Private

No matter how unlikely an event may seem – it can still happen! In 2019 it looked like risk assets would continue rocketing. If you thought that way you would be overweight equities thanks to the ‘Fear Of Missing Out’ and then being badly hit in March 2020. It all shows the importance of acknowledging risk and preparing – by having a balanced and measured exposure to assets with low correlation to each other.


3. Position your portfolio in advance

Kyle Lidbury – Head of Investment Research – Perpetual Private

The interesting thing about 2020’s market downturn is that there were enough investors around who still remembered what happened in 2008. However, due to the relatively quick reaction of governments and central banks, this crisis had a very different flavour. In credit markets, aside from the winners and losers caused by COVID-19, the overall reaction of credit markets was much more tempered. Taking a high conviction bet based on what happened in markets during the GFC would have been the wrong thing to do and, again, shows the importance of having a diversified portfolio.


4. Historically defensive assets can still underperform

Stella McMullen – Senior Research Analyst – Perpetual Private

What surprised me in 2020 was that many stocks and sectors considered “defensive” didn’t hold up well at all in the March correction, and in fact some underperformed the market. Infrastructure and healthcare companies are examples that come to mind. Prior to this pandemic, earnings growth at Sydney Airport for instance was stable year on year, but due to the Government’s response to COVID-19, earnings came under significant pressure in a way never seen before. As a result, investors who used history as a guide when positioning their portfolios may have underperformed the market during the sell-off. The bottom line is that every market correction is different, and history is just a guide. Investors should be well diversified. across not only the Australian equities asset class, but their whole portfolio.


5. Sticking to your plan is vital for long term success

Richard McClelland – Associate Partner | Financial Adviser – Perpetual Private

2020 has demonstrated to me that the investment process does work. Many clients were worried in March in particular, but the way markets performed reinforced that setting up your risk profile and asset allocation – and staying invested – works well. Sticking with your long-term plan is much more beneficial than trying to time the market. 


For help managing risk and finding new opportunities for your investment portfolio in the 2020s, talk to your Perpetual Private financial adviser or call us on 1800 631 381.

Privacy laws apply to our handling of personal information and we collect, use and disclose your personal information in accordance with our privacy policy. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Perpetual Private advice and services are provided by Perpetual Trustee Company Limited (PTCo) ABN 42 000 001 007, AFSL 236643.

This article has been prepared by PTCo. It contains general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial or other adviser, whether the information is suitable for your circumstances. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. To view the Perpetual Group's Financial Services Guide, please click here.