Has COVID changed our investment behaviour?
The mantra of ‘Keep Calm and Carry On’ is likely to have been a well-versed phrase for investors over the past year or so, as the pandemic profoundly impacted the investment landscape. The global impact of the virus has been the catalyst for a seismic shift in public behaviour. Investors should consider the implications of these changes when evaluating prospective investment opportunities.
Social and economic changes
While the pandemic’s impact was unprecedented in many ways, what it has done is to accelerate socioeconomic trends that were already bubbling away beneath the surface. Pointing to the labour market as an obvious example, with previously present, but rather sidelined, flexible and remote working practices rapidly becoming the norm over the past year.
The internet has long been part of our lives, but the pandemic has accentuated the importance of digital literacy. Businesses that went into the pandemic with an established online presence and offering, did better than their less-digitally adapted peers, with web presence becoming vital for retailers as e-commerce took centre stage. It has caused typically ‘tech-averse’ groups to make the shift to digital, as older groups most at risk from the virus began shopping online.
ESG under the spotlight
ESG (Environmental, Social and Governance) investment has been around for many years, but the pandemic has sent it mainstream as consumers became more aware of the importance of supporting companies with a vested interest in corporate governance and sustainability issues. Over the past year, what businesses are doing to support ‘wellbeing’, and how they treat their employees and suppliers, have come into the spotlight like never before, driving a new commitment to ESG issues. Sustainability and governance issues have been propelled up the corporate agenda.
The value of investments and income from them may go down. You may not get back the original amount invested.