Keep calm and carry on – how to navigate volatile markets

Q: Greater market volatility appears to be part of today’s investing landscape. How do you navigate this as a fund manager?

Market ups and downs are a normal part of investing. Over my career, I’ve seen many periods of volatility. While they can feel unsettling at the time, history shows that markets have grown over the long term, despite regular setbacks.

My job is not to react to headlines or short‑term market moves. It is to focus on the long‑term prospects of good businesses and the income they can generate for our shareholders.

Q: Many investors worry that volatility means a recession is coming. Should they be concerned?

It’s understandable to worry, but it’s important to remember that markets and the economy are not the same thing. Markets look ahead. They often move well before economic data confirms what’s happening.

In the past, markets have often fallen and recovered before the economy improves. That’s why trying to step in and out of the market based on economic forecasts can be risky. You can end up missing the recovery.

Q: Why is taking a long‑term view so important right now?

Because trying to time markets rarely works. Some of the best days for returns often come shortly after the worst ones. If you’re out of the market, you may not benefit when prices recover.

A steady approach makes it easier to stay invested through difficult periods. For income‑focused investors in particular, keeping your capital working and dividends coming in can help take the emotion out of investing.

Q: How does being an investment trust help during volatile markets?

The investment trust structure is helpful in periods like this. Because the trust has a fixed number of shares, we are not forced to sell investments when markets fall and investors become nervous.

That allows us to hold on to good businesses and, if appropriate, add to them when prices look more attractive. It supports the long‑term approach that has served the trust well for decades.

Q: What role does income play during volatile markets?

Many of our shareholders value a growing income stream, especially when markets are unsettled.

The trust invests in large, well‑established companies listed in the UK that generate cash from around the world. We focus on businesses that can pay and grow dividends sustainably, through good times and bad.

Q: What’s your key message to investors feeling nervous today?

Volatility is uncomfortable, but it doesn’t have to derail a well‑thought‑out investment plan. Staying calm, staying invested and focusing on quality and income can make a big difference over time.

The City of London Investment Trust has been through many market cycles since 1932. A disciplined, long‑term approach has helped us navigate them – and it remains just as important today.