Conflict in Ukraine
February 25, 2022
The recent Russian invasion of Ukraine is top of mind for many these days from both a personal and investment perspective. Without overlooking the very real personal costs associated with a war in Ukraine (we hope this will be limited), we wanted to acknowledge the potential impacts to global economies and financial markets.
The current financial market backdrop is complicated, given the situation in Ukraine and its potential for secondary effects to other economies combined with the current stage of the economic recovery from the pandemic. Prior to recent developments, both fixed income and equity markets were already experiencing negative returns on a year-to date basis. The additional complexity of Russia’s attack on Ukraine may add further volatility, as countries around the world implement sanctions against Russia.
Quadrant continues to focus on downside risk protection for our portfolios. Given expectations of higher Canadian interest rates as the Bank of Canada seeks to remove stimulus that was provided during the pandemic, fixed income portfolios are positioned defensively towards rising interest rates. Our equity managers also continue to keep their focus on downside risk protection as always, as their strategies seek high quality businesses with resilient business models that can weather all stages of the economic cycle, including unexpected shocks. Our managers are keeping a mindful watch on the potential impacts to global economies resulting from this conflict.
One element of any long-term investment portfolio that should be expected – is the unexpected. These unexpected (or not fully expected) events expand uncertainty and volatility in the markets. While volatility is oftentimes unnerving in the shorter term, it acts as a reminder of the importance of a long-term investment view and the value of the 4Ds of portfolio management:
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We will continue to provide further updates as may be warranted.
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