How has the coronavirus affected your day-to-day work?
We are assessing our portfolio positioning daily and keeping as up-to-date as possible with the medical information flow and subsequent investment implications. While we are looking to take advantage of some of the dislocation in the investment trust market, our portfolios are diversified across asset classes, regions and sectors and therefore we have not had to make any wholesale changes.
The same cannot be said from a workplace perspective, however – it couldn’t be more different! I am now juggling being a mummy to our 10-month old daughter Mila, working full-time and trying to keep the house in some order. Luckily, I am an awful cook and my husband is the next Jamie Oliver so I’ve got off lightly in the kitchen.
What has been your biggest contributor to performance since the coronavirus hit markets? What has been your biggest detractor?
One of our top contributors has been our exposure to US treasuries – both directly and through funds, as investors rushed to safe-haven assets and the US Federal Reserve reduced rates. On the flipside, UK value has been one of the largest detractors from performance – though structurally reducing the UK equity exposure across all our strategies has gone some way to limiting the impact.
Do you have any behavioural mechanisms in place for navigating the market volatility?
We are very much aware of common behavioural biases in times of turbulence. To overcome this, we have a stringent investment process – both top-down asset allocation and fund selection. This is especially helpful in times of volatility when navigating challenging markets and even more so when other emotions such as concerns over our own and our loved ones’ health are high. Data driven factors, including valuations and momentum, help us to focus our attention to both positive – and negative – parts of the market and reduce any behavioural biases that might emerge.
What feedback have you had from clients since the sell-off?
In normal times, client communications are central to our day-to-day agenda at EQ. The importance and clarity of these are even more significant during this volatile period. We have been on the front foot thus far, being as clear and transparent as possible with regard to portfolio positioning, performance and our thinking. It is important to interact using different types of media and our video updates have been particularly well-received.
It is always hard to gauge how much clients want to hear from you, but feedback so far has been that clients feel very safe and secure with us. Thankfully, our Best Ideas and Positive Impact strategies have held-up well. That helps.
What are the key messages you want to hear from your holdings at the moment?
The key message I want to hear as an analyst is that our managers are sticking to their philosophies and processes and exhibiting discipline with respect to their universe, market cap and style exposures. In addition, an understanding of the opportunities and threats each manager sees within their respective asset classes helps us to better frame our thinking.
How do you find working remotely during volatile markets?
I have been amazed at how little disruption we have experienced as a team and a company while having to work from home. Microsoft Teams, Slack, Zoom, WhatsApp, email and so on have meant we have been able to communicate efficiently – in some cases, perhaps, too much so. Our investment team are meeting by video link every day and have all their usual systems available. In these highly volatile markets, it may actually be beneficial to have a little physical distance.
For the gents in the team, they are using the lockdown to give their razors a break and have taken this as an opportunity to grow – or in some cases try to grow – an impressive array of beards!
What do you do for fun when you take a break from working at home?
My answer to this has changed dramatically since a time now referred to as “pre-baby party times”. A break from working currently translates to changing nappies, feeding, playing, bathing, puppet shows, ball pits and bouncers … all made a little easier with a nice glass of rosé, if the sun is over the yardarm.
Do you have a ‘top tip’ to share on working remotely?
A solid routine – or as solid a routine as you can have with a 10-month old baby! Not spending all day in pyjamas, however appealing, is a must. Getting up, showering and getting dressed for the day helps to get you in to a working mindset.
Sophie Kennedy is head of investing at EQ Investors
