Market Insights

Markets don’t like surprises, and yesterday’s “Liberation Day” tariff announcement was no exception. The reaction across global equity markets was swift and negative as investors recalibrated their expectations in real-time. Credit reaction was much more muted, but overall, markets view these tariffs as highly inflationary (+1% on Core PCE) and bad for growth. 

While uncertainty is running high, we believe there is a reasonable chance that policymakers could soften their stance in the months ahead. However, rather than making assumptions, we remain firmly committed to a disciplined, risk-managed approach that prioritizes capital preservation while positioning our portfolios to capitalize on the market dislocations that volatility tends to create.

How We Are Positioned

Leading into this period, we positioned our portfolios conservatively, accounting for both the uncertainty surrounding global policy decisions and our assessment of market valuations. This discipline is reflected in both our credit quality and our liquidity profile, offering flexibility and stability when markets become unsettled – as they have this week.

For strategies where leverage is permitted, we continue to use it prudently and selectively. We apply stringent risk controls to prevent leverage from being used to chase returns, instead employing it as a tool to enhance efficiency within a carefully managed framework. Our disciplined risk management prioritizes liquidity, diversification, and stress testing under various market scenarios. The result is a risk-adjusted approach designed to navigate volatility, not amplify it.

While sharp market moves can be unsettling, they also present opportunities. Dislocated markets often lead to mispricing that active managers can take advantage of – whether through rebalancing, capturing attractive credit spreads, or selectively adding exposure where the market has overreacted.

We are already seeing compelling opportunities emerge, and our focus remains on positioning our portfolios to benefit from market inefficiencies while maintaining a strong risk foundation.

Staying Steady in Turbulent Times

As we navigate this evolving landscape, our investment process remains anchored in rigorous risk management, deep research, and a long-term perspective – principles that guide us through both calm and stormy markets. 

These moments of volatility, while challenging, reinforce the importance of an active and disciplined investment approach to rebalance portfolios and capture dislocations in value. Market swings come and go, but discipline, patience, and a steady hand always endure.

As always, we’re here to answer any questions you may have. If you’d like to discuss our outlook or how we’re positioning for the road ahead, please don’t hesitate to reach out. We aim to continue providing strong risk-adjusted returns no matter the market environment.