Coronavirus and Your Investments Update
This is our second update on the impact the coronavirus pandemic is having on your investments. We are of course deeply concerned and saddened by the health, safety and social impacts of this worldwide tragedy. Here at PCA Retirement & Benefits (RBI), we are taking unprecedented actions to mitigate the impact of this growing threat to our employees and making certain our pledge of service to the employees of the Presbyterian Church in America (PCA) continues without change. You will find further information regarding our preparations below.
At the time of this writing (Friday, March 13, 2020) the most heavily coronavirus-impacted markets have been in the category of stocks. The period leading up to yesterday’s sell-off was extremely volatile. This volatility has been driven by panic and fear as investors radically reevaluated expectations for the broader economy. Yes, the coronavirus will have tragic impacts in the lives of those who are infected, but it is fair and prudent for us to evaluate these impacts on our financial lives as well. At this point, the US equity markets are down just over 25% from their highs. Over the short run, there is much we do not know about the actual impact this global event will have on retirement plan portfolios. Right now, we do know that plan participants should expect to see meaningful reductions in the market values of their investments. The magnitude of these reductions will largely depend on the allocation of your assets in stock-type investments. The PCA Target Retirement Date Funds (PCA TDF) are structured to allocate the greatest stock-based risk and return to those of you who are younger. As investors begin to reach pre-retirement ages, the PCA TDFs significantly reduce these riskier allocations in favor of lower risk opportunities. While there will be losses in pre-retirement and post-retirement portfolios, these losses should be meaningfully mitigated by the good performance of bond-type investments. The bottom line of this market is that professionally managed portfolio diversification strategies (like the PCA TDFs) really do work.
It is very important that investors maintain their long-term perspective during this very disappointing period. We believe the market is being driven down by investors focused on short term strategies. Recent data from Fidelity and Vanguard suggests that clients invested in retirement plan programs are resisting the urge to respond to the daily gyrations of the stock market. Staying focused on our long terms objectives is a winning strategy. One of our Board members works for a legendary investor who has famously said “Nervous energy is a great destroyer of wealth.” We are in total agreement with this statement and would only add that the peace of God which has been given to us through the death and resurrection of Jesus Christ is our constant hope. We resist “nervous energy” because Jesus is the creator of true wealth.
Please contact us if you have questions or concerns. We are convinced that when this pandemic ends those who have remained focused on long-term investment strategy will be in the best shape financially. Below you will find additional information about RBI’s preparations for the coronavirus pandemic.
Staffing: We are taking a conservative approach and will move our staff to a remote working environment should there be any concern about the spread of the coronavirus. We have communicated with employees that if they are concerned, immune compromised, diagnosed, or encounter someone who has been ill to self-quarantine. Regardless of the circumstances, and whether we are in the office or working remotely, we are pleased to serve an incredible group of ministry servants like you.
Business Continuity Plans: We have had a business continuity plan in place for many years. Our plans have included the ability for all employees to work at remote locations, including their homes, using secure technology and equipment, such as videoconferencing for client and colleague meetings. Beginning today, March 13th, we have implemented our business continuity plans.
Interfacing with Strategic Business Partners: We have been in contact with our strategic business partners to ensure their business continuity plans are in place and ready to deploy when necessary. We want to ensure the delivery of products and services will continue and will not affect our ability to provide service to you. If this is not the case, we will notify you.
Ongoing Communications with our Ministry Partners: We will continue to communicate updates with you via our e-newsletter. We will also post updates on a new webpage titled “COVID-19.” This link can be found on the front page of our website.
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