Research Team Update
As the crisis progresses, public markets head Mathias Neidert shares the latest market dynamics and performance data in this research note.
IN THIS PAPER
Equities. As US losses approach European levels, which sectors have done better? Why have Chinese equities been resilient? Are factors delivering outperformance, or giving back some of their early gains?
Fixed income. Global diversification of safe assets pays off as some government bond portfolios turn negative. High yield suffers its worst monthly return in a decade, though short duration strategies and Asian credit have done a little better.
Manager performance and activity. Active managers appear to have been performing fairly well, though robust data will not be available until after the quarter-end. ETFs, on the other hand, have had a rocky ride.
As the crisis has progressed, equity market losses levelled off while fixed income had another troubled week. We await the end-of-quarter manager results with interest but already see positive indicators on active management performance, although the certain factors (minimum volatility, quality) have given back some of their relative gains. Today’s key challenge and concern, beyond the “known unknown” of coronavirus’ long-term impact on the economy, is liquidity. While the current environment may present some interesting value opportunities in both equities and bonds, implementation is proving extremely problematic.
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