Capital Ideas^™ 
Investment insights from Capital Group

Tim Armour: Hello, this is Tim Armour, CEO of the Capital Group. I’d like to start by offering my best wishes to you and your loved ones during this difficult period. And let me share with you how Capital is responding to the global spread of COVID-19 and this market environment.

While this virus is new to the world, market volatility is not. We have seen several viral outbreaks and market disruptions in the past, and markets have always rebounded. It’s worth remembering that this turbulence is not just from the virus but also reflects uncertainty about the U.S. presidential election and the oil price war that just started.

In my 37 years of experience, I’ve been through several difficult periods, the most recent being the Great Financial Crisis in 2008 and 2009. While they were all different, one thing is always the same: they feel terrible as you’re living through them. But I believe that markets, and great companies, will get through this and rebound. 

Today people are scared and concerned because it’s unclear how this virus will play out. That’s understandable. One thing we know from experience is that fear and uncertainty are the enemy of successful investing, causing us to do the wrong thing at the wrong time. While it can be difficult, the key is to look through the current situation and stay the course by sticking to your long-term plan. Ultimately, that long-term view should be rewarded.

In our analysis of the U.S. economy, we are already seeing signs of a slowdown, and a recession has become increasingly likely. I believe eventually the spread of the virus will slow down and people will get back to normal, as will markets.

On the positive side, the U.S. economy remains among the most resilient in the world. It has a history of bouncing back from adversity. Interest rates are low, and the decline in oil prices should further support the consumer and businesses. What’s more, in China, Hong Kong and Singapore where they’ve been dealing with this virus over the past two months, the spread appears to have peaked. People are slowly returning to a less disruptive life and business environment. We expect that pattern to happen here in the U.S and Europe as well.

Rest assured that our more than 350 investment professionals in offices around the world continue to do what they have always done: analyzing companies and bonds and making real-time judgments about where they see potential long-term value. 

We believe this situation, while disruptive for all of us, highlights the strengths of Capital Group’s investment process. Our deep fundamental research, global perspective and long-term view have helped our investment portfolios hold up well in times like these. We will continue to do our very best to provide you with a smooth and less volatile experience than the broader markets. 

At times like these, my best advice is to stay focused on your long-term goals and stay the course. Again, my experience tells me that markets will rebound and life will return to a more normal state.

We’re committed to doing everything we can do to deliver for you in the future. On a final note, I wish you and your family remain safe and well during this period. 

Disclosure: American Funds Distributors, Inc., member FINRA.