Tramondo Quarterly (Q2 2020)

THE BIG PICTURE
COVID-19 brought a swift and sudden reversal to the buoyant investor sentiment that had compelled equities higher at the start of 2020. Liquidity pumped into the financial markets may be supportive for equities and real assets but detrimental for nominal assets.

FOCUS THEMES
We present possible recovery scenarios for the global economy. How the currently reduced market liquidity can be countered with an active management approach focusing on quality and robustness. And a brief explanation of how the recent distortions on the gold market have led to arbitrage opportunities.

ASSET ALLOCATION
We downgraded our view towards risky assets during Q1 2020 as soon as the COVID-19 virus aggressively spread towards Europe and the US. This entailed reducing exposure towards both global equities as well as low-quality credit, and increasing the duration of our fixed income portfolios. We maintain a strategic gold position and would increase exposure in the event of price weakness.