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Global Matters Weekly – Size Matters

Bonds, issued by both governments and corporates, will always have a significant role to play in multi-asset portfolios due to their inherent stability and reliable cash flows, which provide much needed balance for other riskier positions. However, recent developments spurred on by the COVID-19 crisis should prompt investors to consider deemphasising the focus on government bonds from this point and increasing allocations to corporate credit.

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Global Matters Weekly – Risks and opportunities in fixed income

Bonds, issued by both governments and corporates, will always have a significant role to play in multi-asset portfolios due to their inherent stability and reliable cash flows, which provide much needed balance for other riskier positions. However, recent developments spurred on by the COVID-19 crisis should prompt investors to consider deemphasising the focus on government bonds from this point and increasing allocations to corporate credit.

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Global Matters Weekly – COVID-catalysed structural changes in global real estate?

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.

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Global Matters Weekly – Drop the top

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.

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Global Matters Weekly – Some things never change

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?

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Global Matters Weekly – China’s recovery

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?

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Global Matters Weekly – (iI) Liquidity of Property

As we temporarily enter a new way of living, I spent Wednesday night giving my grandparents a step by step guide on creating a Skype account. After a good 45 minutes (which felt like weeks) and a lot of patience we managed to complete the process. They couldn’t quite believe that they could see me and me them as we sat down to eat dinner together via Skype. With my Grandpa’s interest in the financial markets, especially the real estate sector, we had a lot to talk about considering six UK open-ended property funds were suspended last week with the expectation that others will follow this week.

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Global Matters Weekly – The Bear Necessities

“There are decades where nothing happens; and there are weeks where decades happen”. After the longest bull market on record finally came to an end last week, Lenin’s famous quote concisely sums up the current mood among investors. The S&P 500 officially moved into bear market territory on Thursday after it breached the 20% level in a record 16 sessions of trading. Such price action reflects the tragic reality that the coronavirus has now caused the death of thousands globally, and the focus quite rightly is on limiting its human cost. Amidst the barrage of negative news, it is important for long term investors to act rationally and take account of the situation as it develops.

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Global Matters Weekly – Tipping point

When the seeds of the Arab Spring were sown in 2010 in a market in Tunisia, few would have foreseen the chain of events that followed. The resulting wave of civil protest and unrest that rippled across north Africa led to the collapse of regimes and leaders that had been in place for many decades, most notably Muammar Gaddafi. Roll forward nearly a decade and 9,123 kilometres and another otherwise unremarkable marketplace finds itself at ground zero for the current bout of volatility in markets. In reality there is little to link these events, but the pattern of snowballing and onward contagion is perhaps not so different as camels’ backs get broken.

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Global Matters Weekly – Breathe, think, act

When markets panic, the only investment mantra I believe in is “breathe, think, act”. Sell-offs can provide fantastic buying opportunities, but elevated risks often accompany them. After last week’s sharp drop in global equities, is this now a good entry point or is this a falling knife we do not want to catch? Are markets overly worried about coronavirus or are more negative prospects not yet priced in? We believe that, at these levels, risk assets offer attractive long-term expected returns, but more volatility is likely to come.

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