Erste Asset Management

Historic decline in US equity markets – Update from the Investment Division

Historic decline in US equity markets – Update from the Investment Division
Historic decline in US equity markets – Update from the Investment Division
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What has occurred since yesterday (17.3.2020)?

Yesterday´s update started with the advantages of the Bloomberg terminals and also today we used the huge data base. Yesterday we reported on the ten days where the American equity index S&P500 had its largest losses on the same day. These ten days occurred in six different years: 1929, 1931, 1937, 1987, 2008 und 2020.

If anyone would have invested in the S&P500 at that time (including the days with the highest losses) and stayed invested for ten years, there would have been a decent long-term profit. Only if anyone would have invested in 1929 and 1931 and stayed invested for ten years, the profit would be small or there was even a loss. What we do not want to say by that example is that right now from a tactical perspective is the best time to invest. We got a bit more cautious over the last days. Despite that of course the long-term valuation of equity over the last weeks has increased.

Back to today: The equity markets could achieve clear gains. The S&P500 closed 6% in plus. Also the European equity markets gained by ca. 3%. That was caused by the announcement of further fiscal- and monetary measures:

  • The US government announced ca. USD 1.200 billion to support the economy and to avoid a sharp increase in unemployment. Additonal direct money transfers to consumers are possible. Support for small and medium enterprices and tax cuts.
  • The British government announced also a support package. It includes support for mortgage loans, support for airlines and retail sales.
  • The US Fed announced that it will buy directly commercial papers from industrial companies to avoid a liquidity crisis in that market.

Furthermore we assume that additional measures will be announced in the future.

Another positive for the market was the good performance of Joe Biden (a moderate Democrat) in the primary elections held yesterday in Arizona, Florida, and Illinois.

What have we been doing with our funds in the past few days and weeks?

In our bond funds, we have built up the cash positions in order to be slightly more defensively positioned. Furthermore, we reduced the interest rate sensitivity of our funds quite some time ago. This has helped us in the last few days with the rise in government bond yields.

Our dossier on coronavirus with analyses:

Legal note:
Prognoses are no reliable indicator for future performance.



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The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the web site within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the web site A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.

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