Adviser-to-client template: A sell-off, a rebound, and investing through all conditions

For financial advisers to use with clients.

This document is intended to support your service proposition to clients. It is produced by our investment writers with a deliberately light tone and structure. However, these are guidance paragraphs only. It is not guaranteed to meet the expectations of regulators or your internal compliance requirements. If you wish to remove or amend any wording, you are free to do so. However, please bear in mind that you are ultimately responsible for the accuracy and relevance of your communications to clients.

Dear Client, 

After a challenging March, markets have rebounded strongly through April, with some major share market indices even testing new all‑time highs. It’s short and sharp market movements like we’ve just witnessed which provide a timely reminder that investing is a long-term game.

It’s also worth remembering that investing can feel counter‑intuitive. As humans, our brains are naturally wired for short‑term rewards and quick feedback, which is why market moves can trigger an emotional response. Investing, however, requires delaying that instant gratification in pursuit of long‑term outcomes that are inherently uncertain. Recognising this challenge is important, as it reinforces why discipline, patience and a structured investment process are so critical to long‑term success.

It’s understandable that short‑term market moves can be unsettling, however, reacting to volatility often does more harm than good for long‑term investors. Staying focused on long‑term goals, rather than day‑to‑day market noise, remains critical to achieving better outcomes over time.

So, how can we avoid overreacting to short-term noise but potentially take advantage of opportunities that present themselves when there has been a market overreaction? Morningstar apply this discipline through a valuation‑driven asset allocation approach. In simple terms, they seek to take advantage of dislocations in asset prices during periods of market volatility. Through March, markets generally fell in unison, meaning few assets became meaningfully cheaper relative to their fair value and limited opportunities emerged.

With geopolitical uncertainty still present, periods of market volatility are likely to reappear at some stage. When they do, Morningstar will be looking for signs of overreaction, where asset prices move away from fair value and become more attractively priced. That will be their signal to react.

This approach also reinforces the importance of diversification across asset classes, countries, sectors and sources of return, helping portfolios remain resilient through different market environments while staying aligned with long‑term objectives and helping to smooth out the bumps in the road somewhat.

Importantly, investors do not need to take any action during these periods. Morningstar continues to actively manage portfolios on their behalf, applying a disciplined, valuation‑aware process through both calm and volatile markets. Having that peace of mind can be especially important during times of uncertainty, as making emotional decisions in response to short‑term market moves can be one of the most damaging things an investor can do to their long‑term outcomes.

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