Out of equities
Since last week the base case has moved to a situation where much of Europe faces a recession and a view that the US is less prepared than hoped for. Even in the event that the US President, as expected, were in the next few days to announce a stimulus package, and assuming that the Fed, also as expected, cuts rates further, there is still a real risk of a continued vicious circle of self-reinforcing negative feedback across the global economy and financial markets. In this context, we have as always followed our process and algorithms and reduced allocations in equities and high yield bonds. All our strategies and funds are thus positioned in “Defensive” allocations. The Retiro Stable Return is following our fastest moving algorithm and its positions were changed to Defensive, selling its 50% equity position on Wednesday the 4th of March. The strategy and the associated fund had a positive return during the last week.
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