Authored by: Celia Dallas

VantagePoint: Investment Opportunities Six Months Into the Pandemic

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Economic, market, and healthcare circumstances have been extraordinary over the last six months. However, attractive opportunities exist. We see appeal in tech and tech-enabled businesses but remain cautious on elevated pricing. There’s enough value in relatively cheap segments of public equities to justify taking measured, diversified overweights. We are broadly cautious on credit, but see pockets of opportunity in some segments less supported by central bank activity. Finally, the importance of investing in social equity and diversity has been brought into sharp relief by this crisis.

Have Global Equities Bottomed?

Probably not, unless we experience a V-shaped economic recovery. The sudden stop in economic activity across the globe in response to COVID-19 has triggered an economic collapse and led to an extraordinary monetary and fiscal policy response.

VantagePoint: Is It Time to Overweight Equities?

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In periods of market stress, it can be difficult to rebalance, much less overweight risky assets like equities. In this paper, we review our approach using multiple lenses: magnitude and duration of drawdowns relative to history, cheapness of valuations, and presence of pre-conditions for markets to begin their ascent. Such an approach can help investors tune out the emotion and dial in on the hard data and most probable outcomes even in the face of great uncertainty. While opportunities are developing across many markets, investors should hold off on broad overweights to risky assets at this time.

VantagePoint: Fourth Quarter 2019

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As economic growth slows, manufacturing contracts, and major central banks start to ease monetary policy anew, investors need to consider what policy options the world has left in the event this slowdown becomes a recession. Policy rates are approaching or have passed zero at a time in which many countries and regions have elevated levels of government debt. When these economies eventually head into a recession, what are the options for governments and what are their respective investment consequences? In this edition of VantagePoint, we look to the 1930s for some answers, while realizing that intervening changes to the global financial system rule out an exact repeat of that period.