Pennsylvania Trust

COVID-19: An Investment Framework

COVID-19: An Investment Framework

As we work through these challenging times, we want to assure you that your Pennsylvania Trust team remains focused on your financial well-being and hopes that your family remains healthy and safe.

Our entire team has been working diligently to keep everyone informed of the changing landscape as well as to help answer any of your wealth management questions.

If you haven’t been doing so, we want to remind you to check our investment blog. Each day (and sometimes throughout), we are posting observations intended to provide context to the day’s market action. While our investment teams are working remotely, they have been focused on the markets and the securities held across the firm. We have instituted twice-daily meetings to share ideas and to hear important client feedback. As we navigate this landscape, we want to be sure we are considering not only near-term factors but that our accounts are positioned appropriately to adjust to the “post-pandemic” environment.

As we look to past challenges and volatility, it is helpful to divide the crisis into three phases:

  1. Elevated uncertainty and anxiety evolve as the crisis evolves; emergency health, monetary and fiscal plans are developed.
  2. Remedies targeted for crisis resolution are in place, and early signs of moderation are observed.
  3. Economic impacts are better understood, mitigation efforts are largely successful and signs of normalization return.

We believe these phases apply to this current pandemic and that there are and will be investment opportunities that will be appropriate throughout each phase. As we are in phase one – we recommend that investors fight the urge to sell risk assets indiscriminately. Our portfolio managers know what is owned in client accounts and have taken care to build portfolios of high-quality assets that should withstand this true test of time. They will be examining opportunities to upgrade positions as we identify companies and funds that will have a competitive advantage throughout and after the crisis.

This first phase will continue to be dominated by high anxiety and uncertainty. However, the “flattening of the curve” (both domestically and in Europe) and eventual success of healthcare, monetary and fiscal responses will offer clues that will transition the markets into the second phase, subsequently opening investment prospects.

In advance of this, our investment team will be working to identify the asset classes, sectors and individual companies that will be best positioned for success post-COVID-19. Once we are more confident that a market bottoming process has been established, we will look to rebalance portfolios to capture broader opportunities.

While the prospect of adding to equity positions is often a difficult conversation to have during periods of duress, history has proven that the markets are resilient. Ensuring that portfolios remain properly balanced will ultimately allow us to help you reach your financial goals.

We continue to believe that the economic and market disruption will prove transitory and, while extremely painful in the short term, will be contained within this calendar year. Once we progress from phase two to three, the combination of low equity valuations, low interest rates and low energy prices will likely enable the markets and the economy to resume a more normalized growth pattern as we go into November’s presidential election.

Pennsylvania Trust remains fully operational during this challenging time. Please feel free to reach out to anyone on your team with any perspectives or questions you have. Remember to check Twitter, LinkedIn and our blog, and we will continue to email more comprehensive views as this environment evolves.

We thank you for your ongoing trust and partnership and wish you and your family good health.

Sincerely,

Jonathan M. Heckscher
Senior Vice President
Director of Fixed Income and Chief Investment Officer


To follow the latest updates from Pennsylvania Trust, follow us on Twitter, LinkedIn, or check our Investment Blog.

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Disclosure: This Commentary represents a review of topics of possible interest to Pennsylvania Trust’s clients and is not personalized investment advice. It contains Pennsylvania Trust’s opinions, which may change following the date of publication. Information obtained from third-party sources is assumed to be reliable but is not guaranteed. No outcome — including performance — is guaranteed, due to various uncertainties and risks. This document is not a recommendation of any particular investment. Investment decisions for clients are made on an individualized basis and may be different from what is expressed here. Past performance is no guarantee of future results.