Blog

February 25, 2022 

INCREASED VOLATILITY EXPECTED 

This week’s Russian invasion of Ukraine marks a new reality of increased geopolitical risks and uncertainties that will likely linger for years to come. In Europe, President Putin may bring the military conflict to other Eastern European countries, while in Asia, the risk remains that China’s President Xi Jinping will start an invasion of Taiwan.

These military conflicts, and the various sanctions being implemented in retaliation across the world, create supply shocks that will apply upward pressure on inflation and downward pressure on profit margins. We should expect periods of increased volatility in equity markets and wider credit spreads in fixed income markets.

The U.S. Federal Reserve and other central banks now face the difficult task of providing ample liquidity as market volatility increases while managing monetary policies that can dampen inflation pressures.

While we pray the Russia-Ukraine conflict can be swiftly resolved, sparing further loss of life, this crisis demonstrates the importance of strong diversification within investment portfolios to protect against the unforeseeable risks that can quickly grip the capital markets. In keeping with our long-term endowment management philosophy, we plan to maintain equity portfolios in tight compliance with policy parameters, focusing on the long term. Our fixed income portfolios consist of high-quality bonds that provide liquidity, stability and strength, which allow us to continually seek out investments that can best grow our client portfolios. 

If you have any questions or concerns, we encourage you to reach out to our team. Despite the challenges we face, we are committed to protecting, strengthening and growing your mission.