In this month’s Cross Asset Review, we assess the past performance of various asset classes and draw implications for multi asset investors. During the month of February, investors sold down their growth exposure as concerns about virus-induced global recession took hold. Investors deployed their funds in safe-haven assets such as gold, cash and fixed income. Bond proxy assets such as REITS and Infrastructure were also liquidated by investors, leading to negative returns in most cases. In equity, EM outperformed DM while Australian equities were one of the worst performing sectors. As expected, the AUD, which is perceived as a risk currency, weakened relative to most major currencies during this period with TWI down 1.2% in February following large falls in January 2020. A weaker AUD helped unhedged offshore asset returns, with 12 month currency effect from Global equities at almost 11%. The real impact of virus on global and domestic economy is unknown at this stage as the virus continues to spread. This is likely to translate into continued market volatility in the weeks ahead. Investors with well diversified portfolios are in a stronger position to ride this volatility out.
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