This is not to say that investors are blind to the crisis and the prospect of a protracted conflict. A huge 69 per cent believe that this situation will result in permanent changes to the international trade and investment flows between Russia and the west – obviously a sentiment that demands significant consideration.
Moral driver
While just 14 per cent raised concerns about the effects of a protracted conflict and claimed that they were investing more carefully as a result, HYCM’s findings revealed an increasingly moral turn from investors.
Although just a small number (8 per cent) of retail investors are concerned that they rely too heavily on Russian assets and the expectation of a rouble crash, a much larger number (67 per cent) of respondents believe that consumers and investors will boycott companies who continue to do business with Russia, revealing an increasingly moral turn for the investment world.
Clearly, investors believe that these so-called ‘remainers’ should be adequately condemned for their failure to sever ties with Russia, with a further 44 per cent stating that they will reconsider their investments in companies that support Russia’s actions.
In terms of other portfolio adjustments investors are weighing up for the future, with many saying they would increase their investment in safe haven assets should the war escalate or develop into an extended conflict, with this number increasing among those with the largest portfolios surveyed.
No doubt this is a provision that many believe could help them to guard against inflation, should the current situation worsen, and the likes of gold exchange-traded funds, government bonds, defensive stocks, cash investments and currencies will likely prevail in this instance.
Sustainability
Beyond the practicalities of portfolio management, the conflict has provoked a wider debate about environmental, social and governance investments.
In recent weeks, journalists and thinkers have supposed that the war has driven home the importance of industry to provide safety and security to underdogs, and more generally a re-consideration of what constitutes ‘ESG’.
Some individuals are giving this some serious thought, with Sweden’s SEB bank in particular making a U-turn on its sustainability policy that excluded defence stocks from its funds. Now, six funds will be allowed to invest in the defence sector in light of security concerns and geopolitical tensions.
Following this logic, one in four (25 per cent) of investors surveyed on behalf of HYCM plan to invest in defence stocks if the conflict escalates, meanwhile many of those with the largest portfolios believe that stocks in the defence industry should now be considered as legitimate ESG investments.
