The 2020 year started off with a bluster for equity markets. Low interest rates prevailed while global economies were strong; US and China entered into a trade deal, and Brexit was becoming clearer under Boris Johnson. Markets hit record highs and the Rezco funds, being close to fully invested, were performing very well.

Risks then changed dramatically through the end of January, and on early signs of the potential downside from a spread of novel coronavirus outside Hubei province and into China and the rest of the world, we pivoted quickly to a very cautious asset allocation. We decided it was better to sit on the side lines and wait for more information. We did not see the risk of staying invested as worth it – maybe another 5% upside if we were wrong but 30-40% downside if the risks unfolded. The multi-asset funds sold early and aggressively to reduce risk, with the funds moving into USD Government bonds with moderate duration, SA Government Bonds with low duration, and gold.

Read the full article here: Q1 2020 Newsletter