COVID-19 has had an immediate and severe impact on the investment landscape, as anyone who follows the markets and alternative investments can attest. In addition to the current volatility and uncertainty, chief investment officers, or CIOs, should be thinking about the reverberations of the pandemic that will continue in the coming months and years.
For CIOs of allocators, preparing for an uncertain business climate should be top of mind. Some advice our company has been offering as a technology provider to institutional asset owners includes:
1. Build a strategic bench. When the markets are volatile, what’s in your portfolio is, of course, extremely important. But what is not in your portfolio is also important. Given the inability to fully predict our current situation’s short- or long-term impacts, different types of investments become more or less attractive on a weekly or even daily basis. The ability to swiftly evaluate an ever-changing set of circumstances and understand that information in context is key to being able to act on windows of opportunity on short notice. When you haven’t set up the necessary risk-reward framework, criteria and worldview from which to evaluate a rapidly changing environment, such as the one we’re currently experiencing, you might freeze and miss out on these windows of opportunity.
As such, when institutional investors think about building a bench of investment managers across a variety of asset classes, they should take into consideration the ability to bring on different strategies or managers quickly when faced with unpredictable external events. Investment teams need to be able to move fast during times of dislocation. The agility to shift between different investments as seamlessly as possible is absolutely key to weathering uncertainty.
2. Rethink your remote capabilities. With the rapid spread of COVID-19, remote access has become one of the most important capabilities for any team. Because of the current pandemic and the uncertainty around how long it will run its course, organizations can’t ignore the necessity of integrating secure, remote access to their information. This can be accomplished by using cloud-based systems, especially for those that underpin the most crucial processes. Even after the apex of COVID-19 passes and we begin to return to a new normal, the future of our industry is in the cloud. If the current situation hasn’t made it clear, remote access is a “must-have” for all investment management and financial services organizations.
3. Deeply invest in employees and culture. The current business and economic climate are evolving quickly. While it may seem counterintuitive, now is a great time to invest in attracting and retaining world-class talent. In my experience, star players and high-value employees don’t want to sit idle. They want to feel productive and perform the high-value work for which they are trained. In fact, being able to put their skills to work in a way that feels impactful and rewarding may provide a much-needed way for your people to maintain a sense of normalcy when things are anything but normal.
The current distributed work environment in which we currently find ourselves will continue for some time. To make sure your team is as productive as possible and that top employees are doing high-value work, make sure they have the tools and resources that help to maximize their time. Give your people what they need to be successful, while also being sensitive to their personal circumstances.
As a chief investment officer, by focusing on enhancing your access to portfolio information and your team’s ability to work remotely, you are not only positioning your team for success but also cementing a key element of business continuity.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
