Roy Keenan from Yarra Capital Management shares insights with James Dunn from The Inside Network on the role of active management. The Inside Adviser
After the Hayne Royal Commission many advisers decided to steer away from large dealer groups in favour of becoming self-licensed. In the last six months, however, that trend has taken an abrupt turn.
Understanding the impact of switch from pandemic to endemic
The team at Loomis Sayles has released a research note advising investors to prepare for the transition from pandemic to endemic.
Every time a new Covid variant is born, the market is hit with fear and uncertainty as investors brace for the potential economic impact. Loomis Sayles says, “it’s important to pay attention to new variants, but we think investors should plan for a longer-term scenario: a prolonged transition from pandemic to endemic conditions.”
An endemic virus is one that is relatively constant in a population, with largely predictable patterns of spread and rates. The common cold is endemic; influenza is endemic. Viruses can circulate endemically in specific geographical regions, or globally. Endemic does not mean “safe.” According to the Harvard School of Public Health, effectively it means, on an optimistic view, that enough people will attain immune protection from vaccination and from natural infection such that there will be less transmission and much less COVID-19-related hospitalisation and death, even as the virus continues to circulate.
“COVID-19 is likely to become endemic, but not until public health agencies can safely lift all interventions……. this process could take a long time, with potential implications for the global economy,” says Loomis Sayles.
This table captures how COVID-19 might compare to the flu if all public health interventions were lifted today:
While vaccines are being manufactured and distributed at record pace, a large percentage of the population is still vulnerable to the virus. In Loomis Sayles’ view, it will take time to achieve the immunity needed for a successful global reopening. A long transition to endemic conditions, marked by trends and disruptions, will ensue. Here are some of the interruptions likely to take place:
- Lacklustre or short-lived spurts of economic growth as variants come and go
- Persistent capacity impairment
- Continued supply-chain issues, rolling from sector to sector
- Increasing business concentration
- Higher working inventories
- Demographic shifts
- Reduced worker availability
- Continued deglobalisation/more regionalisation
- Migration away from urban centres
All in all, Loomis Sayles says global growth will remain below “full potential,” and inflation could rise and surprise on the upside. Investors need to consider these disturbances and position their portfolios accordingly.
