In this edition of the Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. During Q1, investors sold down their growth exposure as concerns about COVID-19 induced global recession took hold. Investors deployed their funds in safe-haven assets (primarily gold). Bond proxy assets such as REITS and Infrastructure were also liquidated by investors, leading to negative returns in most cases. In equity, DM outperformed EM while Australian equities underperformed both. As expected, the AUD weakened relative to most major currencies during this quarter with TWI down 8.7%. A weaker AUD helped unhedged offshore asset returns, with 12 month currency effect from Global equities at 15%. The real impact of Covid-19 Pandemic on global and domestic economy is still unknown at this stage however the wide-spread rate cuts and liquidity injections from central banks and massive stimulus injections from governments will help cushion the economic and wealth shock from the pandemic. We can however say that investors with well diversified portfolios and good level of risk-hedges and true defensive allocations are well placed to ride out the volatility
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