CIO Insights 3Q20
Dear valued clients,
We were in the eye of the pandemic storm at the start of 2Q20. Amid the volatility, we advocated that you stay invested in build-to-last portfolios as we expected governments and central banks across the world to push through unprecedented policies to quell the impact of the pandemic.
Such build-to-last portfolios would implement the Barbell Strategy – comprising secular growth equities on one end and income-generating assets on the other. Over the course of the second quarter, this strategy paid off handsomely.
Global equities recovered an impressive c.30% from the lows. Our favoured Health Care and Technology-related sectors clawed back all the losses and regained their all-time highs! On bonds, the Federal Reserve’s shock and awe policies brought normalisation to the market, leading to robust returns on Investment Grade and High Yield bonds.
For this quarter, we continue to embrace this winning strategy. Barring a severe second wave of infections, the gradual reopening of economies would ensure a continual tailwind for risk assets.
We are also witnessing massive changes to the way we live, work, and play. Thus, for the third quarter, we highlight the opportunities in a post-pandemic era. In particular, the winners of work-from-home and supply chain diversification, the rise of e-Sports, as well as the growing influence of ESG investing.
I wish you success capitalising on the opportunities of our ever-changing, new world.
Hou Wey Fook, CFA
Chief Investment Officer
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