Complex markets can be difficult to decipher. We provide investment professionals and their clients with a global perspective to help explain the issues and trends affecting their portfolios.
The consequences of COVID-19 will not be equally distributed. Our forecast is for the sudden deceleration in economic activity to be most acute in the second quarter, followed by a resurgence in growth.
Given the multiplicity of factors elevating uncertainty in today’s environment, we are reminded that in order to fully recover a -35% loss, a portfolio must subsequently return +35% and then an additional +14%. The hurdle for recovery from large losses is high. While risk assets may still be attractive, portfolios assembled in a risk-aware manner may help to reduce volatility and narrow the recovery gap.
Source: GSAM. As of July 31, 2020.
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