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April 8th Call Recording: Weathering the Coronavirus Market Downturn Thumbnail

April 8th Call Recording: Weathering the Coronavirus Market Downturn


In this call recording, Simon Quick Chief Investment Officer, Christopher Moore, and Head of Investment Research, Wayne Yi, discuss the market downturn in light of the coronavirus. Please feel free to reach out to us with any additional questions.

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The below transcript was produced using a transcription software and may not be verbatim. Please refer to the video recording for exact phrasing or increased clarity.

Darcy O'Brien: [00:00:00] Afternoon. And thank you for joining us for this afternoon's live call weathering the coronavirus market downturn. My name is Darcy O'Brien and I'm the chief marketing officer at Simon quick, and I will be moderating today's discussion. First of all, I would like to thank each and every one of you for joining us today.

And a special thanks to those of you who have been joining us regularly these past couple of weeks, it is your participation that makes these calls educational and impactful for everyone. At Simon quick, we have clients from a wide variety of backgrounds. And so it follows that there are a wide variety of topics and interests among this group.

Just like our teachers used to say in grade school, there is no such thing as a dumb question. If it's on your mind, chances are someone else's thinking the same thing. So please do not be shy about submitting your questions on that subject. Please note that questions can be submitted through the Q and a function on zoom.

You may also submit questions by emailing me@diobrianatsimonquickadvisers.com. Please note that this call is being recorded and it will be posted onto the blog section of our website tomorrow and circulated over email. Now, before we dive into the questions, please note the following disclaimers. This presentation is for information and discussion purposes only.

Please remember that past performance may not be indicative of future results, and there is no guarantee that the concepts and ideas discussed during the presentation will be profitable or prove success. Okay. So let's introduce our panelists today. We have with us, our chief investment officer and managing partner, Chris Moore.

Chris Moore: [00:01:53] Thanks Darcy. It's a pleasure to be here.

Darcy O'Brien: [00:01:56] Hi Chris and Chris, if you're on speaker, just make sure to adjust your headset so that we can all see you or hear you rather. We also have with us, our head of investment research, Wayne Yi.

Wayne Yi: [00:02:10] Hey, Darcy. Glad to be here

Darcy O'Brien: [00:02:13] Okay, so we've already received a few questions, email over email, and so I'm going to kick them off.

The first question that came in is from Bill. And he says, we saw such extreme volatility in March. At one point we were down 25% and then we ended down only 12%. It's not really a question, but I wondered if you could comment on how extreme March was.

Chris Moore: [00:02:43] This is

Chris. I could start on that one and I'm sure Wayne will have something to add as well.

 March really was an extraordinary period for the markets, and the reality is no one was expecting the coronavirus outbreak, to impact, public health and the economy as much as it has already to date. And it, it really did create a black Swan event for markets. A total surprise. Yeah.

Something that, no one could have even imagined, would be a factor in this year's markets. There were plenty of concerns around corporate credit or, the large cap tech stocks inflating in value. And IPO is coming to market within technology that we're venture backed. And was there potentially a bubble in that universe?

Everyone was talking about other risks to the market. No one was talking about a global pandemic and it took every investor completely by surprise to put it into context. It was the, the fastest, 10% correction the market has ever experienced, even more so than the black Monday in 1987. So the fastest of the market went, declined by 10% in any period.

Secondly, it was the, the quickest in history for the market to go from a recent high to a bear market, which is a 20% decline. Which was six days. So, by purely putting it into context it was declared the fastest 10% decline and fastest 20% decline from a bear from a bull market peak in history for the market.

And I think the speed at which it declined was due to some of the factors I just mentioned, but also due to a lot of technical factors that are in the market today that had, that were not in the market pre-’08 that were not in the market, in the ’01 recession or the recession 1987. And those technical factors just amplified the downturn, Wayne, anything you want to add?

Wayne Yi: [00:05:09] Yeah. I mean, when you just look at the month, end returns, obviously they're all negative, but they don't look awful. In the context of the volatility that we saw and kind of what drove that, I mean, like just using the S and P as an example for March, we're down a little over 12% down, 12% a month is bad, but it doesn't point to the down 25, near 25%. We were down just a little over a week prior to that. The trough of March was I think the 23rd where the S&P was down 24% and then the ensuing kind of slightly over a week. We made back half of that. That's a pretty volatile swing on the way down and on the way up. And I think a while the absolute kind of the month end numbers are meaningful, I think the swing of volatility in that period are pretty dramatic. And we continue to see a lot of dispersion in the midst of that as well. Where, equities, as I mentioned down 24 at trough, kind of rallied in the final few days to be up to be down only 12%. But then when you look at the Russell, the Russell 2000, looking at the small cap index that was down over 30%, from peak, from, March one through March 23rd.

And it was still down 22%, at the end of the month. So, that didn't rally back as hard as large caps did fixed income. That's another area where we saw significant volatility and we've touched on this high, the past two weeks called as well, but preferred, kind of BB high quality, good, issuances out of, at a large banks that don't have any default risks.

Like that was off 27, 28% on the month. And then in the final few days, it rallied to be only down 13%, but these are some pretty dramatic swings where it was the, the confluence of, investor sentiment in terms of where fundamentals and earnings will be and what the macro environment looks like. In addition to this concern about liquidity and financing and will the financial system in the U S sees up on the back of all this.

So, I think the fed in Congress has done a lot to address that. And that's what we're seeing the benefit of currently, but in the depth of, the worst of it, the numbers and results are pretty dramatic. You look at new needs, municipal bonds, like investment grade, high quality, municipal issuers.

That index is down almost 11% on the month, like 11%. When you put that in context of the Barclay's ag being down less than 3%. So there's a big dislocation for that perspective and that market's still under down nearly 4%, 3.6%. So. Yeah, there was a significant volatility in the middle of March. And, obviously there's still more to recover from here, but that's kind of where the opportunity set lies going forward.

Darcy O'Brien: [00:08:20] Thank you, Chris and Wayne, the next question in our inbox comes from Gail and she asks which investment opportunities or strategies are the most exciting to you in today's environment. Is there anything particularly unique due to this volatility that wouldn't be attractive in more normal conditions?

Wayne Yi: [00:08:43] this is Wayne. I'll touch on a few things that we've been spending time on from the research perspective. This is stuff that not necessarily we didn't go from ground zero to start working on it, in the past few weeks, but rather things that we've been keeping an eye on and the opportunity that has gotten that much more dramatic and interesting for us to get to kind of dial up, for obviously when you look at equities, I think we've spoken a lot about where the market that we like.And obviously it's an easy way. It's pretty transparent to look at equity markets to see if the stock market is doing well or not. And over the past, let's call a couple of weeks. It looks like the markets are definitely kind of bouncing back here. We're up like North of 20% from, from the trough.

So the markets feel good from an equity perspective, that was a dramatic sell off on the way down. And it's a pretty kind of healthy recovery kind of in this in the earlier innings of  what looks like a resolution, to this pandemic. But other segments of the investible universe have not yet recovered or are still pretty beaten up.

And I think there are some really interesting kind of multi-year opportunities in that space and, maybe I'll just kind of talk a little bit about that. And a lot of that tends to be in the, in the credit space. We touched a little bit about distressed, maybe a week ago. Distressed investing as a whole is pretty attractive.

It's also counter cyclical to what equity markets are doing and equity fundamentals are doing. So it's a nice balance to what's going on in stocks, but the stress as a nomenclature is really broad. So kind of where are there specific areas or pockets where you've seen a particular dislocation that still requires effort and can still drive significant returns over the next several quarters and years?

 As I mentioned earlier, how yield at its trough was down nearly 19%. We've made up probably about half of that, so far just in the vanilla index. But when you start looking at more complex instruments in securitization structured credit, okay. When you throw those kind of names out there, people start getting a little nervous in terms of what it actually means, but there are what's a securitization is an aggregation of a lot of different underlying, loans and obligations, whether they're from a consumers, small businesses, maybe small companies that, have loans out there, and the securitization pull those assets and kind of parses out the risk and return opportunity based on individual risk appetite.

So look at basic kind of credit structure. AAA being the top of the capital structure it is highly likely that you will make all your money back, with none, very marginal, if any, losses, versus if you look at the equity or the lower, rated tranches, you're probably making typically mid to high single digits type returns.

But there is greater risk of principal loss or something, the component of losing a portion of your principal. So just kind of thinking through that capital stack, an investor can say, all right, I am risk averse. So I just want to buy things at the highest end of that capital structure or I'm a risk seeker, and I'm going to buy stuff at the bottom end of that capital structure.

Now pre-crisis, kind of, let's go, just say into February. Structured credit investors did not expect to make a lot of return owning the AAA, but that was a highly, highly defensive, conservative posture. Very strong liquidity. It lines with all other things in right outside of treasuries.

It'd be the next asset class that, people would buy, for of, principle protection with marginal, interest income. What happened in the middle of March was that as the market sold off, people didn't want to sell the riskier stuff, because that was the stuff that was selling off dramatically.

Right. If you think about equities stocks are off 24%. You don't want to sell something that's down 24%. You'd rather sell something maybe that's only down 5% or barely down and use that to buy whatever's cheaper. Or if you need to pay an obligation, you would sell what hasn't had this big dramatic sell-off and use that to fund whatever obligation or cash need on the other side.

What we saw in March was there was this huge exodus of investors out of the most liquid safest parts of the capital structures in order to raise outright cash. you saw that in the municipal market, you saw that in the, the investment grade market, and you saw that in the securitized structured credit market and different, I put those numbers in the context, we saw AAA paper trading off four or five points.

If you think about that, that number in itself is not that big, but on the flip side, what you had were whether they're institutional investors, insurance companies, other holders that had put some leverage on that, AAA paper. And even if you did one turn of leverage your four or 5% loss became a 10% loss.

And then you had to sell that to meet potential margin requirements or liquidity needs under the side. And what you saw in the first half of March was dramatic selling in the highest quality paper. and that was what really kind of persisted for the first three weeks of the month. But until it got to the end of the month where the more, the less liquid stuff really guys started getting sold off pretty dramatically.

 That actually create a really interesting opportunities out here because you're seeing AAA paper, like the highest of the investment grade quality yielding a lot more attractive opportunities. And we're seeing some of our managers be able to express some of those, kind of, investment opportunities today.

And, this is kind of really timely right now, but one of our higher conviction ideas that we're seeing in this space is in, a call. Well, I'm going to call it TALF. There's a lot of complexity around it, but really it's a way for the government to support the liquidity in the financing markets on these AAA high quality pieces of paper with private investors. We have an investor that we have a relationship with, with an investment fund that has done this through the great financial, the global financial crisis in 2008, and is now able to take advantage of this opportunity to, again, we're looking at an opportunity set where you can make.

Mid high teens returns, owning the highest rated a paper in the stacks. And that's highly compelling because the sell off was technically driven, not fundamentally driven, and to be able to be a liquidity provider in the highest and see if it's assets that's really attractive. And I think that compliments really well with other things that we're seeing in traditional structured credit and distressed.

But that there's like a near term visibility in terms of the opportunity set and the rationale and the principal protection, you can get an owning safer assets. So that's something that's really compelling and interesting and something that we would love to be able to talk to clients and investors for.

Darcy O'Brien: [00:16:28] Okay, great. Thank you, Wayne. Our next question comes in from Clive and he asks. Please, let me know what is happening to bonds and how they are faring in this down equity mortgage environment.

Wayne Yi: [00:16:47] Yeah. I'll answer this in a shorter way, but liquidity is coming back now because the fed has provided a lot of, backstop facilities and is offering financing and liquidity to the banks, as well as other investors to normalize the market. We're not fully there yet. And I think that's where you're still seeing a lot of these discounts, but liquidity is coming back.

You're seeing a lot of funds out there also being launched right now to take advantage of these kind of shorter term opportunity. so liquidity is coming back, but we did see a dramatic, period of illiquidity for just several days, but it was enough to really have squeezed out, parts of the market. We can sell good assets that had to sell good assets just to meet their own leveraging requirements.

And, in that comment, there's a question about mortgages. And I don't know if that's kind of underlying mortgages of individuals, but mortgage rates have been one of the main kind of, we can't hold her that got punished pretty hard in this market. Being down in anywhere between 40 to 80% they're high quality assets that they own.

Or there are a lot of high quality assets they may own, but because maybe in leveraging or the structure of their financings, Are causing them to sell and be in a bad position that is creating some other opportunity, but it's part of the illiquidity that we've seen in the markets.

That's been driving some of these potential opportunities.

Darcy O'Brien: [00:18:17] Okay. Thank you, Wayne. Our next question comes in from Greg and he asks is the worst behind us and have we turned a corner?

Chris Moore: [00:18:31] I can start with that one. I think it's too early to know if the worst is behind us. There, there are kind of three factors that the market is still very much keeping a close eye on to figure out if we tested the lows or continued to kind of gradually move higher from here. It certainly feels like in this 20% rebound, the market is responding favorably to the fed and treasury stimulus packages and monetary policy moves.

The three kind of areas where the market is, is laser focused to figure out, whether or not things are going to get worse from here or better from here are first and foremost, are we at a point where, the rate of the spread and the virus and the deaths from the virus are, peaking or plateauing or ideally, coming back down and declining, such that the, the point at which everyone can get back to work again is maybe sooner than many we're predicting.

 There's been some. Evidence to support that. And some of the countries in Europe, you know, in New York city, governor Cuomo has said, he thinks the worst is going to be this week. And we're seeing, you know, somewhat of a slowing of the number of, ICU patients. And, he's optimistic that, you know, this week or potentially next week will be the peak.

There are other parts of the country that haven't been hit as bad. And, maybe the virus is kind of behind them at this point. So that is kind of the first factor that the markets are trying to digest. Are we peaking and is the rate of the spread declining and the number of deaths declining, or nearing a decline.

The second is what is the impact to the economy? There's been a lot of projections. Some of them really dire, bank of America, Goldman Sachs came out with some pretty dire projections for economic growth and unemployment specifically here in the U S but also globally. And, so the assumptions that are baked into those projections are really dependent on how long the shutdown last, right?

Governor Murphy announced last night. An extension of, the state of emergency in New Jersey for another 30 days. New York is, is certainly still in a state of emergency. what other States are all of a sudden going to come back to market sooner where folks who maybe get back to work, That economic impact is really an unknown at this point, until we start to see hard data around unemployment, around GDP growth for first quarter, we won't really kind of know, how, how much the economy is in fact impacted.

So that's the second factor. The third is the potential for the virus to resurface in the fall and, what kind of vaccines are available and widely available. Frankly, to prevent the possibility of that happening and kind of witnessing the Spanish flu, like scenario of 1918, 1919, where it was a W shaped recovery as opposed to a V or U shaped recovery.

 And, the theory that the folks that have abided by the stay at home order and are not out and about, and are not exposed to anyone with COVID-19, don't have any immunity whatsoever. So when they're eventually put back into the workforce, the potential for them, to all of a sudden, get the virus and then have kind of a second wave of spreading in the fall.

 So I think those three elements are very much front and center for markets. And, we'll see, time will tell if any of them have an impact or, maybe we have another stimulus package here to support the SBA financing and the PPP, and maybe, the fed continues to aggressively purchase assets in the market and we slowly recover out of this and the worst is behind us.

 So I think we're, We're in a good place right now sbaed on maintaining a neutral exposure to equities, which is where we, we got throughout the last couple of weeks within our asset allocation. If we were to see a position where maybe we tested lows again, I'm not saying that it's likely, but if we did, or if we, all of a sudden got much more confident that outcome for the economy and the spread of the virus was more positive that could potentially lead us to increase our equity exposure, but at these levels where we're not increasing them any further than we've got it to this point,

Darcy O'Brien: [00:24:10] Thank you, Chris.

The next question in the queue comes from Rhonda and she writes, I was put into PE funds last year and I'd like to know why are these still good opportunities?

Chris Moore: [00:24:27] I can start with that one and Wayne can jump in. Yeah, the most of the PE and venture funds that we've allocated to within the last year have actually been really slow to call capital because prices were high last year. It was harder for the average piece on that we allocate to, to find a deal that they liked at a price that they liked.

And a lot of them were slow to put capital to work last year and wanted to kind of wait it out until valuations were more in line with their process and philosophy. So that leaves a lot of them with dry powder today and all of a sudden, okay. In an environment where companies are looking for liquidity, they're looking for capital it puts those private equity funds at an advantage now, because, they can buy assets that they liked a year ago at a much cheaper price we had. One venture fund comment about, they bought a new company within their fund and just the last two weeks at a valuation that was 35 to 40% lower than they thought they would have had to pay for it.

And they kind of said a lot of that was a function of what's happened in markets today. So the short answer is we still like the illiquid private market as a way to, gain returns for long term capital, and, we think the fund managers that we've hired are going to do really well, identifying attractive opportunities at good prices when a lot of those companies are in need of liquidity, based on the last 90 days.

 The one caveat to that, sir, there will be businesses. That will be more impacted than others, by the spread of the virus and what it's done to those businesses. I mean, you know, restaurants in particular or, office space in production color will be more impacted because of behaviors changing.

And that could provide an opportunity for funds that have uncalled capital to invest in those industries or asset classes that they think are poised to recover when the economy is back on track.

Wayne Yi: [00:27:11] Yeah. Just one quick comment on that private equity investments tend to be a multiyear investment, versus if you're just looking at the equity market or the bond market where. If the markets recover and recovered quickly, obviously that one year of performance in public equities will outpace a one year return in private equity, but in private equity, we're looking for several points of outperformance over a multiyear cycle to believe something in the 10 year type period.

And that in itself is really attractive versus a long-term rate of growth of return from the, from the public equity market. Kind of if you're just looking at the S and P so. For a long-term investor that can look beyond just kind of the bouts, the fits and bouts of kind of short term, business cycles, private equity continues to make a lot of sense and there's active engagement that you can if they do any public perspective, that makes the asset class really still really interesting.

Darcy O'Brien: [00:28:16] Thank you, Wayne and Chris, our next question comes in from Joshua and he asks, do you feel that the more negative number is predicted by Goldman Sachs and others is baked into current market levels? Or do you think they base their baked on more mild assumptions meeting market levels?

Chris Moore: [00:28:36] I can take that one and then love to hear Wayne's opinion too.

 Personally, I think it's good that some of the, the forecast for economic growth have come out as extreme to the downside as they have, because I do think it is good for market participants to digest the possibility of those outcomes. If I was to say, as the market fully priced them in probably not fully.

But if you were to kind of average out all of the expectations for the economy, from the most positive to the most negative, I would say we're probably somewhere between the average and the most negative. I think the market is, is tending to, favor a more negative outcome, but we're probably moving to somewhere in the middle in the last week and a half, I think the 20% rally here is the market moving away from the most kind of dire scenarios and thinking that things may not be as bad as some of those early projections were indicating.

Wayne Yi: [00:29:54] Yeah. I mean, I don't know if you recall,   Christmas or December, just looking at the market, the stock market, and look at the economy in that holiday season, the market, the economy was humming. Those are really strong numbers. So I think there is an expectation that, you know what, when we get out of this, the pandemic, we're going to go back to where it was.

And I think the market's high fighting in more of a sharp V than a U. Or a let's call a slanted L or something. So, the rebound is what I think the market's really hoping in on given that if you can, if you shut down dramatically in a short amount of time, but can reopen then businesses can, whether that's short term impact and continue on.

Now, if the pandemic were to continue longer. And I think this is where people are taking the other side of the longer, the pandemic, the longer business are shut down. The less likely they can come back. So as that becomes a smaller and smaller possibility, the market is kind of leaning more towards a potential V like a recovery and I think some of the kind of price action, you see more recently on the back of that, but yeah, I mean Goldman's numbers were down pretty dramatically for the second quarter, but just kind of looking on Bloomberg.

You're seeing some kind of quarterly numbers, even more than that, and significantly better than that. So I think there's still a lot of unknown out there and here's what the hard number is, but it's the go forward outlook in terms of what's the pace of recovery thereafter.

Darcy O'Brien: [00:31:26] Yeah. Thank you, Wayne. Our next question comes from one of our anonymous attendees and they ask if we don't currently understand the economic impact of this pandemic, should we maintain caution or be defensive until we can see better? What kind of shape the economy is in?

Chris Moore: [00:31:48]

We have actually gotten more defensive within our equity portfolio over the last 30 days. This was something we did touch on last week, but we've rotated out of some of the more cyclical sectors and industries, within credit we've maintained kind of a higher credit quality bias.

 We don't own high yield. We don't own, loans. We really stayed to kind of the highest quality assets within. Both, you know, the equities and the traditional fixed income allocation, because we want the exposure because, you know, we do, we want to participate as things get better, even if we may see a short term period of weakness.

But we also want to own what's going to be a least kind of permanently impacted if things were to get worse, and likely most inclined to kind of outperform the broader market and certainly, the junkier assets. So we've gotten more defensive within what we own. but because of, you know, recent valuations, we like, we like owning them at these valuations for investors that are thinking a year or more out, trying to time the bottom or, you know, waiting out to see if things get a whole lot worse before adding risk, historically just doesn't work, because you inevitably miss a day, like Monday where you're up 7% or a day last week, you were up 9%. I think we've seen in just the last 30 days that equities and bonds quite frankly, can rally up, just as quickly as they move down.

And, you do want to be invested to capture the upside. I think being careful about what you own along the way is what's most important though.

Darcy O'Brien: [00:34:11] Yeah. Thank you, Chris. Our next question comes in from Joshua and he asks, what about energy and MLPs? What is prospect and triggers for potential recovery and longer-term prospects?

Wayne Yi: [00:34:28] this is Wayne and I'll comment a little bit about this. We reduced our energy exposure, just kind of tagging on the back of the comments Chris just made. We did take a posture where even though we increased our equity allocation, it did move into a more defensible,  aggregation of, of managers, because we didn't want to make a bet in terms of what that, kind of recovery and expansion would look like and the timing of that.

So because of that, Cyclically sensitive stocks are exposures we've cut dramatically. Energy falls within that bucket. It is highly cyclical, both from a commodity perspective, as well as a company perspective. It is very cheap and it has been cheap for a really long time. And it  doesn't matter.

People are nervous about having nervous about the energy construct, despite the boom that we've seen in the U S in terms of kind of energy production. So, because of the uncertainty around, kind of macro effects, both domestic and internationally, we reduced our energy exposure. It seems like there is a Russia and OPEC namely Saudi Arabia, are getting closer to the table to kind of hash out a deal to kind of cut back on production, but tying back on production on lower demand. Anyway, it's like, sure. It kind of staves off some of the downside, but it's still down. So that kind of the pressure is if things do well, it'll rip back hard, but.

We're not, we don't feel it's worth the trying to chase it right now when there's still so much economic uncertainty, cause anything cruise lines. These are more cyclical where you don't know if they need to be early to make good returns, but we do need it more of a foundational,  conviction on the, on the path of, economic growth before we get bigger there.

Darcy O'Brien: [00:36:40] thank you, Wayne. We are nearing the end of the questions in the queue. So just a heads up to everyone on the line. If there is a question you would like to answer today, please go ahead and submit that. And if not, we will go ahead and answer this last question and, move on to wrap up the call.

This question comes in from Brian and he asks, where do you think the value is in fixed income if you are willing to take risks? Can you rank for favor in spaces, in fixed income from both risk and reward value and potential returns?

Wayne Yi: [00:37:17] Yeah.  I apologize for the really long winded response I had on the first question, but I think it just kind of shows where interest and focus has really been in over the past several days and weeks, but within fixed income.

I think it's more of a piecing what's going to make strong returns within the next quarter, few quarters versus what could be multiyear kind of return opportunity. Distress investing generically well is going to be highly, highly attractive because equities from a large cap equity perspective. Talk about the S&P.

The S&P will be the first thing to run back to rally hard and in a more benign market S and P constituents will be the winners in an expansionary economy. The distressed company is a company that really were, have weak balance sheets or did not have the wherewithal to survive the cyclical downturn.

They're going to come under significant pressure and are going to create interesting opportunities for distressed investors to participate in. So we think that's going to be a multi-year opportunity. We're seeing that from our underlying investors, up-sizing deals and, ability to participate in restructurings, you'll get multiples of return on your money if you go through that cycle, but that will be a multiyear cycle.

The top opportunity within structured credit. Once again, buying AAA, AA, top of the capital structure, securitizations instructor credit, and getting government support in very cheap financing that is highly interesting today and not everyone can do it. You cannot just go to your next distressed fund and say, Hey, can you raise this fund? Like you actually have to have access, and relationships, internally with the government to be able to, with the reserve to be afforded the liquidity and the liquidity structures around it to buy into proper capital structure, assets and to generate good returns.

I think that's really interesting. The opportunity set is not going to last for that long, but the risk reward there is really good making mid to high type returns over a relatively short period of time in a much more defensible position, we would love to be able to talk more about this opportunity with clients.

 Yes, I would say those are the kind of two elements that I kind of focused in on, but broadly structured credit kilos, CLO equity, at deeply discounted levels just because the market and market effects that's interesting as well. So there's a lot to do in fixed income across the, the risk spectrum.

Darcy O'Brien: [00:40:07] Our next question comes in from one of our anonymous attendees and they ask as results come in from investment managers for March and overall for the quarter, how should we put them in context, given the severity of this decline?

Chris Moore: [00:40:24]  I'll start and let Wayne finish with this one. The thing is that that's really his world, I think. I would just caution investors, that there was nowhere to hide in March. It was an unprecedented month in capital markets across equities, across bonds, unless you owned cash or treasuries, you were impacted and, likely will be surprised many funds performance during the month, because it was such an extreme risk off in a, very kind of short period of time and to Wayne's earlier comments, it wasn't just, the lower quality assets, high quality assets, were sold off during the month because investors wanted liquidity and the muni bonds is a great example. The Municipal market had a really difficult March, municipal bonds are historically kind of a low risk investment. But because folks wanted liquidity, they were selling anything that they could and, March was an extraordinary month across all strategies, and all asset classes, truthfully.

Wayne Yi: [00:41:50] Yeah. And, the there's a broad, there's a lot to talk about here. I mean, there's lots of talks about across a lot of different things, but when we look at kind of return experience versus what the markets have done, I would say when you look at the underlying asset classes, the underlying asset classes that the fund was invested in, they largely caught the beta in that period of volatility and it does that in short term periods when volatility spikes, and by spiking, we exceeded 2008 levels correlations, all go to one, and it does doesn't matter if you own a defensive thing versus a versus an aggressive thing, it all sells off.

So in that short term, you saw everything move out and you saw interim month numbers that looked really bad. In the back half of March, what you started seeing was a rationality coming into the markets. And you're seeing that now, too, as volatility steps down to 40 on the VIX it's while we're still in a downward target on a year to day basis, there's more rational buying and selling with less aggressive ups and downs.

 And I think there's more rational trading in the sense that utilities are more defensible. So that's a shareholder in healthcare a, high quality, kind of secular, industry. And that should have a good growth opportunity, a group, good growth prospects. So that makes sense. Same thing with staples.

 We're seeing that now we saw that in the final week, final few days of March, and we're seeing that right now in the first few, in the first few days of April. So we're seeing much more rationality and performance and the calendar days on the calendar days and you kind of, that's kind of where you set the mark.

 But, I think in a period of a little bit more normalcy, we're seeing more rational kind of pricing. And, from that perspective, some of the things that you're buying, our managers, are buying more. I would say they're more authentic today than they were a month ago or two months ago because they're seeing things priced attractively, and are good entry points.

Darcy O'Brien: [00:44:17] Thank you, Wayne. And, Chris, unless there are any more comments at this time, there are no remaining questions in the queue. I would like to thank everyone on the line for taking some time out of their day to participate in today's call. thank you, Chris.

Chris Moore: [00:44:34] Thanks Darcy.

Darcy O'Brien: [00:44:35] And thank you, Wayne.

Wayne Yi: [00:44:37] Thank you.

Darcy O'Brien: [00:44:39] If you have any additional questions that we were not able to address during the call, please do not hesitate to send them to me at dobrien@simonquickadvisors.com and we would be happy to address them offline. Thanks again for joining us and have a great evening.


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