Five lessons from the COVID-19 crisis

The coronavirus pandemic sparked a surge of volatility across global financial markets. What lessons could investors draw from the COVID-19 crisis? In this paper, MSCI looks at five key lessons for investors:

Global investing provided diversification opportunities, as the crisis spread to different regions at different times and with varying intensity.
Managing factors was more critical than picking stocks, as cross-sectional dispersion due to factors rose more sharply than stock-specific volatility.
Markets have not been indiscriminate during the crisis; large performance variation across factors provided opportunities for active management.
Companies with strong environmental, social and governance (ESG) characteristics suffered lower declines in relative terms during the crisis.
Index-based strategies played a critical role in facilitating price discovery and providing tools that enabled investors to make asset allocation changes.

To read the paper click here

Five Lessons for Investors From the COVID19 Crisis

The Florida State Board of Administration has made some strategic moves to take advantage of opportunities in the dislocation, including in private equity, distressed debt and active listed equities.. But CIO, Ash Williams, is concerned about the underlying real economy.

Asset owners adapt and respond to COVID

The Responsible Asset Allocator Initiative finds that 25 leading public pension and sovereign wealth funds, with assets of $6 trillion, are investing tens of billions of dollars in COVID-19 solutions and in funds to support stricken companies. Here they look at what the leading asset allocators around the world are doing to respond to the pandemic.

COVID-19 impact far from over

New research looking at the impact of COVID-19 under different scenarios – from opening of economies to no vaccine – suggests the economic consequences of COVID-19 under all scenarios is substantial and the ongoing economic adjustment is far from over.

IMCO uses nimbleness to advantage

Meticulous planning for the next market crash, and an eye on liquidity, meant IMCO was well positioned to invest, particularly in credit, when the opportunity arose. The fund continues to use its agility to its advantage and is now looking for opportunities in private markets.

Alternative data as a market predictor

It is critical to analyse how much COVID-19 could impact the US economy and stock markets but most of the traditional factors or economic indicators will lag the market movement. Therefore, alternative datasets other than the financial data show their explanation power to provide insights into the pandemic. This article, by academics at Tsinghua University, University of Illinois and Carnegie Mellon University, looks at the pattern of the market fluctuation from the perspective of alternative data.

August 14, 2020

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