Policy makers seem to have learned from their previous financial crisis mistakes when policy response came too slowly and passively. Using history as a barometer, time is of the essence and policy response usually have to be big and fast to help thwart a crisis from escalating further. On March 15th, the Federal Reserve held an emergency meeting that resulted in cutting interest rates to near zero, the lowest since the creation of the Fed.  The 10-year and 30-year Treasury yields also achieved a record in Q12020 when yields fell to an all-time low at 0.54% and 0.99% respectively. The Fed took it to another level when it restarted its quantitative easing program (QE), engaged across bond markets to ensure liquidity is flowing, and acted as the lender of last resort by providing loans to households and small businesses. Fiscal policy makers were also swift to respond, with Congress passing an unprecedented $2 trillion stimulus package on March 27th to support individuals and businesses until the storm has passed. Discussions continue about additional steps to take to support the market and economy.

We entered the first quarter of 2020 with a defensive/quality and US centric overweight in our Equities positions that helped mitigate the downside impact of our portfolios. The prospects of businesses both large and small being forced to the edge by the pandemic, created a genuine fear that some businesses might go under and created a shift towards businesses that were well capitalized with high cash balances. Our US centric all equity portfolios- Tactical Growth Solution and Spectrum that emphasize on strong balance sheet companies captured 65% and 80% of the market downside respectively during this period of heightened volatility. CAPSTONE, our world all cap portfolio also ended in a better position than its mid cap and small cap counterparts. We continue to remain focused on meeting our clients’ longer-term financial goals and objectives, while managing and balancing nearer-term risks. This perspective has informed our decision-making process in previous market cycles and will continue to inform our decisions going forward.