We read and hear new developments every day regarding COVID-19 (coronavirus). As fears of a global economic recession have only grown, UCF’s Director of Institutional Relationships, Matthew Wagner, offers these important points to keep in mind as we navigate these challenging times:
Diversification Matters
Diversification is key, especially in times like these. Safe-haven assets, specifically fixed income investments, have benefited from a “flight to safety” by investors in the wake of volatility in equity markets and a return to a lower interest-rate environment, spurred by interest rate cuts from the Federal Reserve. Most UCF clients benefit from diversified portfolios, which, in the case of the Moderate Balanced Fund, includes 30-40% fixed income investments. As of March 11, UCF’s Fixed Income Fund has returned 3.25% year-to-date, adding to the return of nearly 9% in 2019.
Valuation Matters
UCF is an active investment manager with the same long-term time horizon as our clients. As global equities have fallen significantly over the past several weeks, our Investment Team has taken advantage of an opportunity to invest at an attractive discount, compared with the equity market highs of 2019. We have incrementally and prudently added to equity exposure (2% across all Balanced Funds), leaning in to volatility with an eye toward a long-term rebound. Our experienced investment managers are tasked with security selection and use this opportunity to buy strong but under-valued companies and sectors.
Social Responsibility Matters
UCF prides itself on our ability to generate competitive investment returns while also investing our assets under management in alignment with the values of our clients. Our portfolio screens prohibit ownership of thermal coal companies, as well as companies that explore for or produce oil from tar sands – two screens which generally limit our overall fossil fuel exposure across all asset classes. In fact, as of December 31, 2019, UCF’s Moderate Balanced Fund (held by many UCF clients) had only 3.2% equity exposure to the energy sector, limiting the negative impact of lower oil prices on our portfolio.
Our team of professionals at UCF stand ready to answer your questions, meet with your leadership as needed, and continue managing your assets prudently and responsibly. Please reach out to us anytime by emailing [email protected], or calling us at 1-877-806-4989.