The Core Value Portfolio (CVP) generated a return of (-2.59%) in February. Whilst a negative return, this was against a backdrop of equity markets falling significantly in what became a volatile month. Up until the last week of February, most major market indices were trading flat to up. However, in the last week equities sold off dramatically with most markets down (-10%), as the realisation that Coronavirus was turning into a global pandemic, heightened concerns about the broader implications for economic growth.
This was reflected across all asset classes along with equities. The yield on the US 10-year bond hit record lows of 1%, credit spreads widened, oil fell 13% to under $45/barrel and the AUD fell almost 3%, briefly trading below 65 cents versus the USD. The Australian equity market ended down (-8.1%) for the month, while the MSCI World Equity Index ex AUS (in AUD) posted a loss (-4.9%), a smaller number as it benefited from the depreciation in the Australian Dollar.
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