SALIX update: Negative Yields & Coronavirus panic

These are “fast markets”: prices of most assets are highly volatile. Risk assets (equity, property, industrial commodities) are down and “safe” assets (sovereign debt, gold) are up. 

We always position our clients for resilience, and while we cannot avoid some “red ink” in portfolios we have seen their values cushioned by this. Yesterday we witnessed the first time ever that UK gilt prices rose to a level that meant that they had a negative yield. As a result they were immediately sold (for considerable profit), along with US treasury holdings. We profess no insight into how or when the coronavirus crisis will bottom out but we do know for certain that holding an asset that is guaranteed to lose money when held to maturity can no longer be called investing. 

This note updates you with our thoughts on why this action was necessary, what drove prices to this position and a general update on how the coronavirus is affecting markets and investments.