How does one respond to the lack of safe haven protection, evident from the February and March 2020 sell-off?
The COVID-19 pandemic is having a huge impact on health, global economic activity and financial markets. In many ways the impact overshadows the Global Financial Crisis of 2008. It now feels unimaginable how sanguine markets were in the first seven weeks of 2020. Again, we are in the midst of a battle between depressing fundamentals and a worldwide policy response from central banks and governments to prevent a full capitulation and damage beyond repair. What stands out is the speed of the market correction and the fact that almost nothing was able to compensate for the loss in equities. An institutional investor with a globally diversified portfolio has found little comfort in almost all other asset classes and alternative investments. There are structural reasons for this lack of offset and this paper will first focus on the reasons behind this. The question then becomes how to respond?