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Virtus Viewpoints - Q1 Vontobel

Is There a Light at the End of the Tunnel?

The fight to contain the coronavirus (COVID-19) and its impact on the global economy dominated market movements in the first quarter. Stock prices fell sharply as global lockdown measures, combined with an emerging oil price war, served to undermine investor confidence. Many major indices recorded their worst performances since the 2008 financial crisis, and in some cases, since 1987. All sectors in the MSCI All Country World Index (ACWI) produced negative returns in the double digits, with energy and financials the hardest hit.

While the COVID-19 virus has already generated a heavy human toll, new government mandates to combat its spread are producing unprecedented challenges for investors. Indeed, the impending government-induced recession is quite different from past economic downturns that naturally occur as business cycles mature. The impact is indiscriminate – impaired business activity and enforced quarantines are producing negative consequences for both strong and weak companies.

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The commentary is the opinion of SGA. 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 an indication of future results.

Investing involves risk, including the risk of possible loss of principal.

Index definitions: CBOE Volatility Index (VIX) is a measure of implied volatility, based on the prices of S&P 500 Index options; a rising VIX indicates expectations for rising S&P 500 volatility, while a lower VIX indicates expectations for quieter trading. MSCI All Country (AC) Asia measures large and mid-cap equity performance of Asia’s developed and emerging markets. MSCI AC Asia Pacific measures large and mid-cap equity performance of developed and emerging markets countries in the Asia Pacific region. MSCI USA measures large and mid-cap U.S. equity performance. MSCI World measures equity performance of developed global markets. MSCI All Country World (ACWI) measures equity performance of developed and emerging markets. MSCI EAFE® measures developed foreign market equity performance, excluding the U.S. and Canada. MSCI AC World ex U.S. measures equity performance of developed and emerging markets, excluding the U.S. MSCI Emerging Markets measures equity market performance in global emerging markets. MSCI Europe measures equity market performance of Europe’s developed markets. MSCI Latin America measures equity performance of Latin America’s emerging market countries. All MSCI indexes are free float-adjusted market cap-weighted and calculated on a total return basis with dividends reinvested.

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.

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