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As a landlord and investor in real estate, I am closely watching how the world adapts to the global lock down. In our case at Momentum Global Investment Management, the transition from office to homebound working has been seamless. I wonder if this is going to cause a structural change in the demand for office space over the medium term as companies renew their current lease commitments and review their ongoing office accommodation requirements.

Three months ago, investors were looking forward to an improved year of global growth and corporate earnings. That was then. The coronavirus crisis is an era defining event; life before coronavirus and life afterwards. Above all it is a humanitarian crisis on an epic scale, the speed of its destruction amply illustrated by its spread: on February 29th there were 85,000 confirmed cases across 58 countries, with 2,924 deaths, by 6th April there were 1.25m cases and over 69,000 deaths as the pandemic reached 207 countries.

A lot has changed and at the same time many aspects of our lives and work go on much as before. We met last week for our regular round of asset allocation meetings just like we always do, only this time via video link rather than all sat around the desk. One area that looks interesting to us currently is convertible bonds, which in many cases are trading cheap relative to their component parts: the straight bond and the equity option. While convertible cars, or drop-tops, tend to dominate the drawdown phase of most people’s lives, convertible bonds have something to offer in the earlier accumulation phase.

With the unprecedented levels of volatility witnessed since February 19th it is very tempting to focus on the short term and the effect on the investment performance whilst losing sight of the benefits of longer term investing.

The graphs herewith show Trough to Trough Market Cycle performance of the GBP, USD & EURO Harmony Funds as benchmarked against the stated targeted returns of these funds. As you can see they have exceeded target in each case, demonstrating the effectiveness of the management team and the worth of investing over the longer term.

We are living in unprecedented times, with much of the world under lockdown due to COVID-19. There are a multitude of potential outcomes resulting from the increasingly extreme global measures being taken to prevent its spread and of course many unanswered questions regarding the lockdown exit strategy or how it all ends. While we are yet to change our portfolios allocations materially, we are making evolutionary changes to the underlying holdings to emphasise balance sheet strength. It doesn’t presently seem appropriate to add significantly to portfolio risk: we stick to our unwavering belief that a well-constructed diversified portfolio is the most efficient way to achieve longer term outcomes. Nevertheless, it is instructive to sketch positive scenarios into our outlook and where better to look for inspiration for a positive spin on events than China, which was the first country to go into full lockdown at the end of January. What can we learn and more importantly what can we expect?