Monthly Fact Sheet, May 2020

Lockdown is ending and economic activity is bound to improve from the catastrophic levels in April. However, with many equity prices near all time highs, equity markets are discounting a significant rebound and return to the trend level of GDP enjoyed prior to the crisis.

In recent months there has been plenty of relative value opportunities without taking significant market direction risks. Unfortunately, we suspect these relative value opportunities will be less abundant in the coming months should the recovery stay on track. We remain underweight equity markets but, we expect to moderate that position in the coming weeks. Liquidity is abundant and it is finding its way into financial markets. Credit markets are presently surprising calm, interest rates are at all time lows and commodities are very cheap! Risks are obviously enormous too which prevents us form taking a more robust allocation at this time.