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April 22, 2020 - The best way to bear afflictions is to look to the end of them.

This is what seventeenth-century English minister Matthew Henry wrote in his Complete Commentary. When all things are made new, the suffering and sorrow of those who believe will be overcome by joy. Our future glory outweighs our present pain; the light of our tomorrow outshines the darkness of today.

We recognize these are troubling times and the impact of this pandemic is far-reaching. Many of us are carrying unrelated burdens as well. Whatever trials we face, may we endure together by looking to the joy set before us.
 
Fast Facts:

• Volatility continues this week amid Monday's oil market collapse and markets' anticipation of another $400 billion-plus stimulus package adding additional funding for small businesses, hospitals and expanded COVID-19 testing.
• Short-term U.S. oil contract prices turned negative for the first time due to weak demand and storage capacity issues associated with global excess supply. 
• To circumvent storage concerns, the Railroad Commission of Texas and the Oklahoma Corporation Commission, both of which regulate the oil-and-gas industry in their states, could move to limit output in their regions.
• Additionally, reports suggest the Trump administration may provide further incentive by offering to pay producers to keep crude in the ground. 
• Investors will be watching June and July oil contracts closely.

Dependable Distribution
The HighGround Capstone Endowment Fund's current payout rate has increased to approximately 5.5% as a result of the decline in market value. At this time, HighGround does not plan to adjust the Fund's current $20.05 per unit annual payout as everyone needs the endowment distribution. Once the crisis has subsided and markets stabilize, we will review payout rate data. Our intent is not to change the payout rate for the remainder of the year unless there is another precipitous market event that puts added pressure on the rate. As with prior market downturns, the per-unit dollar distribution may have to be lowered as we make our typical recommendations to our Board. Should a change in distribution need to be made before the normal annual distribution determination, you will be given ample notice to make budget adjustments as necessary. We can always adjust distributions on client-controlled accounts at any time. 

Diversification: Best Defensive Move
We believe better-diversified portfolios have greater potential for long-term growth. Spreading investments into different equity and fixed income markets, while also investing in non-traditional alternative asset classes, is the best defense for softening market volatility. Return streams of well-diversified strategies are expected to be less volatile because performance correlations among individual asset classes tend to vary with one another, reducing overall portfolio volatility. In other words, when one asset class “zigs,” others “zag,” tempering volatility and importantly protecting asset value when capital markets experience dramatic downdrafts.

Tactical Allocation in Volatile Markets
Tactical asset allocation (sometimes referred to as “market timing”) is not part of HighGround’s asset allocation process, even in volatile periods like these, as we do not think it is a reliable source of added value over time due to the unpredictability of future capital market performance and difficulty of determining the proper timing of tactical shifts. We have not seen evidence that tactical asset allocation adds value in long-term multi-asset class portfolios and believe, instead, that it adds unnecessary and uncompensated risk to the investment process.

It is human to feel anxious or overwhelmed in times of trouble. We wish to ease your burden by stewarding well what you have entrusted to us – and by enduring alongside you in our journey to joy.