Multi Sector - Finding Value in Spread Sectors
The first quarter of 2020 has seen volatility spike to levels not seen since the financial crisis of 2008-2009 and will be remembered for the emergence of COVID-19 as the first global pandemic since the H1N1 “swine flu” of 2009-2010. The ultimate human and economic toll is not yet known as the event continues to unfold. Governments and central banks, however, are responding in unprecedented fashion to help blunt the effects of the virus. Our expectation remains that policymakers will fine-tune their response as warranted.
The containment measures implemented to date are unambiguously negative for near-term local, regional, and global economic growth. Financial markets have responded to the expected economic shock by repricing sharply lower in most cases. Policymakers have acted forcefully and valuations across multiple asset classes have improved.
The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.
Past performance is not indicative of future results.
Bloomberg Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. Bloomberg Barclays Municipal Bond Index is a market capitalization weighted index that measures the long-term tax-exempt bond market. J.P. Morgan GBI-EMGD tracks total returns for local currency debt instruments issued by emerging markets sovereign and quasi-sovereign entities to which international investors can gain exposure. J.P. Morgan CEMBI Index tracks U.S. dollar-denominated debt issued by emerging market corporations. J.P. Morgan EMBI Global Index tracks the total return for the U.S. dollar-denominated emerging markets debt, including Brady bonds, Eurobonds and loans. The Credit Suisse Leveraged Loan Index is a market-weighted index that tracks the investable universe of the U.S. dollar denominated leveraged loans. The Bloomberg Barclays U.S. High-Yield 2% Issuer Capped Bond Index is a market capitalization-weighted index that measures fixed rate non-investment grade debt securities of U.S. and non-U.S. corporations. No single issuer accounts for more than 2% of market cap. The indexes are calculated on a total return basis. The indexes are unmanaged, returns do not reflect any fees, expenses, or sales charges, and are not available for direct investment.