HIGHVERN has watched the unfolding conflict between Russia and the Ukraine with great concern. A potential humanitarian crisis is unfolding and HIGHVERN has been following rapidly evolving guidance from relevant governmental and regulatory bodies to try to do its part to mitigate the effect of the crisis. In its exercise of its fiduciary responsibilities, and in accordance with our extremely high standards of governance, our attention has also been naturally drawn to the assets held by our clients and the potential impact of the war on the value of those assets. HIGHVERN is not and does not hold itself out to be an investment expert, but we believe that it is clearly appropriate for all parties involved in the management of the structures to which HIGHVERN provides services to assess the impact of the crisis on financial markets.
As a result, we have had many in-depth conversations with the banks and investment managers that we regularly work with to manage client assets and have carefully reviewed the regular written commentaries that have been issued by senior people within those institutions. Although those commentators stress that:
- the situation is evolving rapidly
- no one knows how prolonged the conflict will be
- no one can foresee all the potential outcomes
There has arguably emerged a general consensus amongst those institutions that:
- Geo-political events tend to have short term effects on financial markets and that volatility eventually settles down
- The long term investor should not be unnecessarily frightened that wholescale financial losses are imminent within public markets
- Rapid knee-jerk rebasing of portfolios or wholescale sales of financial instruments is not an appropriate response, except for specific financial instruments which have high degrees of direct exposure to Russian/Ukrainian economies
- Observance of Sanctions by those managing client assets is the most appropriate primary focus for those managing client assets at this time
The Government of Jersey, where HIGHVERN’s head office is located, have taken a very robust stance on this conflict and the Jersey Minister for External Relations issued the following statement on 1 March 2022:
“Jersey fully supports, has implemented, and will continue to implement, all UK and UN sanctions deployed in response to Russia’s actions. Our Jersey legislation to give force to these measures has severe criminal consequences, and any links to sanctioned entities or suspected breaches must be reported to the appropriate authorities. Where the UK takes further actions, beyond sanctions, we will give effect to the policy intention of all additional measures being introduced.”
We will continue to monitor the rapidly evolving situation and respond accordingly. Where there are material reduction in values of client portfolios we will work with the investment managers to take appropriate action, and rebalance as they recommend.
Please get in touch with your usual HIGHVERN contacts if you would like to discuss our approach to this issue. We would also encourage all our intermediaries and third party advisors to remain vigilant and contact us should they have any concerns.