Insights Portfolio Positioning Amid Recent Market Moves

Highlights 

• Bessemer mandates entered 2020 with moderately less risk versus strategic benchmarks in part due to the expectation that volatility would be higher than it was in 2019.
• In this note, we provide context on the developments regarding the coronavirus, which has been the immediate trigger of the past week's sell-off; compounding factors have included increased uncertainty in the U.S. political landscape and heavy positioning in certain equity sectors, in our view.
• The market is most focused on the negative hit to business and consumer spending and sentiment resulting from industry and government response to the virus.
• We expect weak economic growth in the first quarter and earnings of many multinational companies to suffer from complications in global supply chains.
• Our base case is for stimulative central bank actions and increases in economic demand in 2Q and 3Q to offset 1Q weakness, leading to greater volatility in the coming months but not a weaker 2020 in aggregate.
• Given our already somewhat defensive positioning, the changes in Bessemer mandates in recent weeks have been tactical and at the margin as we continue to monitor and analyze the changing landscape.