Dan Delany and Matt Scherer
April 17, 2020
After a positive start for international markets in January with the signing of a Phase I trade deal between China and the United States, the novel coronavirus prompted a steep sell off in equity markets around the world. Investors are faced with unprecedented uncertainty surrounding the impact of the virus on economies and corporate fundamentals. Intensifying the uncertainty is the media coverage of both the progression of the virus and its market implications. The uncertainty has produced negative market returns previously unseen in such a short period of time. The MSCI All Country World Index (ex US) was down 23.4% for the quarter, the MSCI Emerging Markets Index was down 23.6%, and the S&P 500 was down 19.6%, again besting international markets.
Managing stock portfolios is especially challenging during these volatile periods. The situation is quite fluid right now and to the best extent possible, we try to ignore the media frenzy and deal in facts. For our investment team, facts are comments directly sourced from our companies’ senior management teams. As such, we are spending our time getting them on the phone to develop an informed and objective view. We have talked to over half the companies in the portfolio as well as several companies on our watchlist. Our focus has been on their COVID response, balance sheet strength, and understanding the mix of sales which have been lost vs. delayed. With that in mind, here are some anecdotal comments.
It is not unique to expect continued volatility and uncertainty. However, we do think investment performance will diverge between those managers who make trades to feel “in control” and those who invest based on facts and strong fundamental research. Our team is working hard to speak with companies around the world to formulate our investment thesis and portfolio adjustments. If you would like to hear more, please feel free to contact us.
Dan Delany and Matt Scherer
CIBC International Growth Strategy
CIBC Private Wealth Management includes CIBC National Trust Company (a limited-purpose national trust company), CIBC Delaware Trust Company (a Delaware limited-purpose trust company), CIBC Private Wealth Advisors, Inc. (a registered investment adviser)—all of which are wholly owned subsidiaries of CIBC Private Wealth Group, LLC—and the private wealth division of CIBC Bank USA. All of these entities are wholly owned subsidiaries of Canadian Imperial Bank of Commerce.
This document is intended for informational purposes only, and the material presented should not be construed as an offer or recommendation to buy or sell any security. Concepts expressed are current as of the date of this document only and may change without notice. Such concepts are the opinions of our investment professionals, many of whom are Chartered Financial Analyst® (CFA®) charterholders or CERTIFIED FINANCIAL PLANNER™ professionals. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S.
There is no guarantee that these views will come to pass. Past performance does not guarantee future comparable results. The tax information contained herein is general and for informational purposes only. CIBC Private Wealth Management does not provide legal or tax advice, and the information contained herein should only be used in consultation with your legal, accounting and tax advisers. To the extent that information contained herein is derived from third-party sources, although we believe the sources to be reliable, we cannot guarantee their accuracy. The CIBC logo is a registered trademark of CIBC, used under license. Approved 79-20.
Investment Products Offered are Not FDIC-Insured, May Lose Value and are Not Bank Guaranteed.
March 22, 2020
April 06, 2020
Dave Donabedian, CFA
April 15, 2020
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