The COVID Diaries: investor 1

The following interview is with an Australian-based fixed income investor. It was conducted on 19 March 2020.

Are you working from home? If so, how challenging has the change been and, if not, do you think you will be working from home in the coming weeks?

As of 20 March, we’re now three days into our split-team approach and it appears to be working quite well. I’m part of the red team, which is in the office this week – although even many of the red team are working remotely so the numbers in the office are pretty thin! There is still a great deal of activity across the business despite the scattered workforce.

How close do you think the market will get to business as usual if we are in a period of social distancing for multiple months, including working from home and little or no face-to-face interaction?

A lot has happened. From the growing realisation that COVID-19 was not just a Chinese problem to extraordinary central-bank action and government stimulus, the markets have had to digest much information in a small amount of time.

Our view is that this may take multiple months to resolve and a period of social distancing, including working from home or no face-to-face meetings is likely. We are prepared for this and will adjust our business as this occurs.

"Our work-from-home policy usually requires a distraction-free environment. However, we’re recognising that the current situation requires more flexibility. Many of us will be working from home with partners and possibly our children there, so we will not be uninterrupted."

What other changes are you making in your personal and professional life?

Our work-from-home policy usually requires a distraction-free environment. However, we’re recognising that the current situation requires more flexibility. Many of us will be working from home with partners and possibly our children there, so we will not be uninterrupted.

We have asked everyone to exercise common sense and work when and as they are able. If you can work most of the day and get through some key deliverables or projects, that is great. If you have a day where this is not possible, we are happy for you to use carer’s leave or take unpaid time, as opposed to using annual leave.

What are you most worried about in this period, personally or professionally? How worried are you in general?

The outbreak of COVID-19 comes at a critical juncture for global markets, where participants were already growing nervous about the health of the global economy and a sluggish growth outlook.

In the last couple of weeks, global markets have experienced extreme volatility. The local share market is down significantly and liquidity in fixed-income markets is tightening.

The liquidity-driven momentum markets we have experienced the last 10 years have not suited our investment style. It has been difficult for active managers to add value with all risk assets growing indiscriminately, regardless of the quality of their earnings or financial position. This is all being flipped on its head now. It is not the time to be in a passive strategy so, all else being equal, our active strategies should do well.

Our firm manages a range of pooled funds and we have a legal obligation to protect the interests of our unit holders. During market stress, it is common to see increased volatility and increased redemption requests from clients, reduction in liquidity and a widening of credit and bond spreads, which increases the cost of trading.

We understand this is a tricky time for clients, in the context of work, family, disruptions to daily life and so on. To the degree that we can take some of that pressure off the work side of things, we are happy to engage and discuss the dynamics as and when they change.

What is the latest article you have read in relation to COVID-19 and what did you like/not like about it? Can you provide a link?

Working from home can be a challenge for those of us used to an office. I found this article quite helpful. It offers tips for productivity and keeping healthy: How to look after your mental health while working from home. https://www.abc.net.au/life/coronavirus-covid-19-mental-health-working-from-home-advice/12062284

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