We would like to welcome our newest colleague, Alex Riteau, to the SystematicEdge team. Alex started his career with BNP Paribas, where he most latterly worked as a structurer at THEAM working on systematic multi-asset and equity strategies. He has a Masters degree from ENSAE in Statistics as well as an MSc in Risk & Asset Management from EDHEC Business School. We are excited to welcome Alex to the Portfolio Management team!

MARKET CONTEXT: The valuation of Equity Markets rebounded in April within a dislocated global financial market. Asset-classes sharing common underlying risks such as equity (going up) and high yield corporate bonds (going down) are moving in opposite directions. Financial assets will remain volatile until the peak of the pandemic has passed. As we are progressively getting more data on the long lasting economic effects of the virus crisis, investors can identify opportunities to put money to work at a discount in market segments where there is visibility on how and when the capital will be returned and how the cash flow generation will participate to the total return of the investments.

Our latest whitepaper has been written for SMEs that do business cross border and are exposed to the volatility of foreign currencies. Many SMEs are at risk because they do not hedge their foreign currency exposure, resulting in the reduction of their profit margin or even losses. In some cases this can lead to bankruptcies. The reasons often cited by SMEs for taking this risk are due to the high costs usually associated with hedging and the lack of turn-key solutions in the market.

MARKET CONTEXT: Global Financial Markets will remain volatile and dislocated until the peak of the pandemic is reached in the US. For medium term investors, the dislocation in the financial markets and the indiscriminate asset liquidation offer opportunities to put money to work at a discount where there is visibility on how and when the capital will be returned and if cash flow will actually be generated during the asset holding period.

MARKET CONTEXT: There is continued Impact from the Coronavirus which is now spreading through-out the rest of the world. “How deep will the economic impact be” and “how long will it last” are the two uncertainties currently impacting the financial markets.