Navigate 2020’s stormy markets – win £20k

Players of The Daily Telegraph’s new Fantasy Fund Manager game have to gamble as coronavirus cases rise again and investors fear a second crash

recovered more than 60pc of their losses. However, a spike in America and local lockdowns in Britain have caused fear to return.

Experts are split on whether another increase in cases – and any subsequent lockdown, with all the associated economic consequences – would spark a repeat of the falls of early 2020.

Another lockdown would further damage the economy and those businesses already on the edge, propped up by government-backed loans and tax deferrals. Consumers would again suffer reduced incomes if millions were unable to work. Only firms that sold essential goods such as medicines, food and household items, or the utility companies, would be unscathed.

On the other hand, governments around the world – alongside central banks – have spent billions to support citizens, businesses and financial markets. The recovery in share prices in April was directly correlated to repeated support from public institutions.

The direction of share prices over the next three months will be of great importance to the thousands of players of The Daily Telegraph’s new Fantasy Fund Manager game. The online-only stock-picking challenge is free to play and the winner after three months will receive a £20,000 prize courtesy of our sponsor, AJ Bell Youinvest.

Players need to create a portfolio of between five and 20 stocks from the FTSE 350 index and will have a notional £100,000 to invest. The game will start on Monday, although funds can be created in advance, and the player with the largest portfolio by Oct 2 will receive the prize. AJ Bell Youinvest will also provide a £100 prize every week for whoever performs best over five days of trading.

Fantasy fund managers will be able to make as many changes to their portfolio as they see fit, swapping stocks in and out as markets fluctuate and the consequences of any rise in Covid-19 cases become clear. Unlimited changes allow investors to see what could happen without having to suffer the consequences of being wrong.

The summer months normally offer more placid markets. Yet the circumstances that drive this, the summer holiday, may not apply in 2020.

Participants will have to be on constant alert to ensure their portfolio changes with the times. Any sign of distress and it could be beneficial to back safer, reliable stocks. However, if markets trend upwards, a fantasy portfolio will have to consist of a handful of the quickest risers to come out on top.

Experts believe the most likely outcome for the months ahead is that markets tick higher because of stimulus from central banks, generous government spending and unwillingness across the globe to lock down as thoroughly as in March in order to avoid further economic damage.

Shamik Dhar of BNY Mellon Investment Management said the most likely outcome, at a 50pc probability, was that there was no second wave and that we had a V-shaped or U-shaped economic recovery instead. This would imply either an instant economic recovery, which should see share prices maintain their momentum, or a recovery by the end of the year. Either way, downward pressure on stocks should be minimal.

“We have seen the low point in global economic activity and the most extreme lockdowns. Economies continue to reopen, healthcare systems are able to manage any new outbreaks and a second round of lockdowns is prevented,” he said.

Iain Barnes of Netwealth, a wealth manager, was less bullish. He said there could be considerable volatility along the way, particularly in the coming months if case numbers rose.

Graham Bishop of Heartwood, an investment manager, said governments would be less willing to implement full lockdowns in the future in order to limit economic pain. None the less, he suggested being less gung ho with stock markets and adding some safety to portfolios in order to get ahead.

Sign up: telegraph.co.uk/ fantasy-fund