After nearly 12 years of positive market returns the big falls in March 2020 came as a shock to the system for many and especially those nearing retirement. The Covid-19 crisis market downturn has been masked by generally positive returns as DC Defaults rebounded relatively fast. Overall, equity-driven DC Defaults were hit hardest in March 2020 but benefitted the most from the rebound, especially those with lower exposure to UK assets. On the other side, lower risk and more diversified DC Defaults had average performance as, while they managed to protect better during the March fall, they had reduced exposure to those markets that recovered quickest over the following 12 months, for example they may not have taken full advantage of overseas equity markets which recovered the majority of the losses from the first quarter of 2020.
Although the impact of Covid is an important consideration, it is important to ensure your default investment strategy has an appropriate level of risk and future growth opportunities, and not to focus solely on its performance over the pandemic.