We hope that you, your family, and your community are moving past the worst of the health and economic consequences of COVID-19. Our thoughts are with you during this period of recovery.
Ascertaining a medical solution has rightly remained the dominant focus of global policymakers, though the economic backdrop has fortunately evolved from one of aggressive shuttering to one of cautious normalization. Economic evidence suggests that through relatively low-cost face masks and targeted physical distancing measures, economies can recuperate while vaccines and treatments are developed.
From an investment perspective, we find that this unprecedented moment validates the lessons of strategic discipline, risk management, and quality. As we enter the US election season, the skills acquired from navigating recent volatility should prove useful yet again.
The remainder of this edition of the Market Know-How will focus on summarizing our macro expectations and providing a framework for breaking out.
We emphasize:
- Alpha-oriented, bottom-up strategies that can identify disruptions in the competitive landscape. Recovery is likely to be non-linear and discriminant.
- Broadening global exposure to expand the alpha opportunity set borne from COVID-19 disruption.
- Balanced exposure to value/cyclicals as they may provide brief, yet powerful, episodes of outperformance. However, the macro landscape remains growth-biased in our view.
- Commitment to a high quality core bond allocation to buffer equity volatility rather than avoiding it.
