MARKET COMMENTARY

Market Volatility and the Impact of the Coronavirus

03.02.2020

As concerns about the Coronavirus continue to grow, we want you to know that all of us at Fiduciary Trust are thinking about the individuals and communities around the world that have been affected by this virus. Our number one priority is the wellbeing of our clients, employees and their families.

We also want you to know that CIO Ron Sanchez and his investment team are actively monitoring this situation, carefully evaluating its potential long-term implications for investors, and adjusting portfolio allocations accordingly. Ron will continue to provide updates in our Perspectives communications.

Focusing on Health and Safety

At Fiduciary, we have an Enterprise Business Resilience Group that helps us think through the business impact of large-scale events like the Coronavirus. This team of senior leaders is meeting daily and taking necessary precautions to make sure employees in each of our offices are safe and we can continue to serve you efficiently. The team has developed a plan for employees to work from home, if necessary, and accommodate clients who prefer to meet via teleconferencing rather than meeting in person.

We are also limiting international business travel to trips that are absolutely necessary and asking our teams to avoid hosting large events.

So far, the impact of the Coronavirus in the US has been limited. So, some of these precautions may seem a bit extreme.  However, we are exercising an abundance of caution because our number one priority is the wellbeing of our clients, employees and families.

Confronting Market Volatility

Fiduciary Trust’s long-term investment approach has always been grounded by a rigorous risk-management process, which has served clients well over the past several weeks. More specifically, we:

  • Prepare for market drawdowns. Your investment policy statement provides a clear description of your long-term goals and the risk-management techniques we employ to help you achieve them. Short-term market volatility is a natural part of the investing cycle and always expected.
  • Allocate portfolios strategically and tactically. Our active management of client portfolios allowed us to prepare for recent market disruptions by elevating our cash positions. This also allows us to pivot from defense to offense when market volatility fades and capture buying opportunities when they present themselves.
  • Focus on high-quality holdings. A quality bias in our security selection process means that the companies we invest in are leaders in their industries. They have strong cash flows, healthy balance sheets and well-established track records of earnings growth to weather the storms.
  • Know what we own and why we own it.  Our portfolio managers thoroughly understand each security in your portfolio and can offer a detailed explanation of their rationale for holding it.
  • Diversify to manage risk. We avoid concentrated positions and speculative securities.

Rest assured, we will continue to monitor this situation closely and update our response accordingly.

If you have specific questions about our health and safety initiative or the positioning of your portfolio, please reach out to any member of your Fiduciary Trust team. We are here to help.

Regards,
John M. Dowd
CEO, Fiduciary Trust Company International



The information provided is intended solely to provide general information. The information and opinions stated may change without notice. The information and opinions do not represent a complete analysis of every material fact regarding any market, industry, sector or security. Statements of fact have been obtained from sources deemed reliable, but no representation is made as to their completeness or accuracy. The opinions expressed are not intended as individual investment, tax or estate planning advice or as a recommendation of any particular security, strategy, or investment product. Please consult your personal advisor to determine whether this information may be appropriate for you. This information is provided solely for insight into our general management philosophy and process. Historical performance does not guarantee future results and results may differ over future time periods.

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