How has the coronavirus affected your day-to-day work?
From a portfolio perspective, not at all. Having worked from home from time to time before the crisis, the main difference now is we have regular team video meetings throughout the day rather than sit next to each other. We have very quickly shifted into the new environment and ensured we have a structured day with some time away from screens.
What has been your biggest contributor to performance since the coronavirus hit markets? What has been your biggest detractor?
The S&P 500 put options have been the biggest positive contributor. We do not really have a biggest detractor as we do not run any significant individual position sizes. Clearly the equity portfolio is the biggest influence on performance as we had very little if any exposure to credit or property.
Do you have any behavioural mechanisms in place for navigating the market volatility?
Yes, we have regular face-to-face team meetings – three or more a day – to ensure the isolation doesn’t impact our thinking. Sitting on your own, constantly bombarded by negative views, can lead to herding and poor decision-making,
What has surprised you most about markets during the coronavirus sell-off?
The weakness of gold. It has been a provider of liquidity, given its performance over the past few years.
What feedback have you had from clients since the sell-off?
We have been very visible, providing updates on portfolio activity and our approach to the crisis. Feedback has been very positive, so far. I believe investors are prepared for falls, but they rightly dislike information vacuums.
What are the key messages you want to hear from your holdings at the moment?
Clearly, I want to know businesses’ approach to capital allocation during the crisis. But I also want to know that companies are helping their communities and treating their employees and customers well. Those that behave well will outperform in the recovery.
How does this compare to other market sell-offs you have managed money through?
Very similar, in so far as it is characterised by fear, panic, irrational behaviour and lots of noise. The only difference is the cause – this time it’s medical. With the exception of gold, mentioned above, markets are performing as you might expect in a period of financial stress.
How do you find working remotely during volatile markets?
No different from working in the office.
What do you do for fun when you take a break from working at home?
Options are limited in a lockdown! We have been watching the Giri/Haji box-set.
What is your favourite snack when working from home?
Gluten-free hot cross bun.
Do you have a ‘top tip’ to share on working remotely?
Establish a structure and keep to it.
David Coombs is head of multi-asset investments at Rathbone Investment Management
