MARCH 30 - APRIL 3 MIDWEEK UPDATE
April 1, 2020 - At HighGround’s all-staff vision meeting in February, leadership revealed our theme for 2020: Flexible Focus. While our mission to protect, strengthen and grow your mission is unchanging, we recognized the need to be flexible in our focus to fulfill that mission.
Only a month after unveiling our theme, an unforeseen pandemic swept the globe, putting every organization’s flexibility to the test. Just as you are now adapting to new work environments, overcoming new challenges, and finding new ways to focus on your mission, we are maintaining a flexible focus to serve you best through these uncertain times.
- Despite recent market surges, the S&P 500 was off 19.6% at the close of the first quarter, its worst quarter since 2008. Conversely, HighGround’s Capstone Endowment Fund was down 10.5% for the first quarter.
- On March 29, President Trump extended the nationwide social distancing guidelines to April 30th. While these measures may exacerbate a sharp economic disruption in the near term, some investors believe they will minimize long-term damage to the economy.
- Markets continue to be volatile this week and investor sentiment is expected to remain fragile during the second quarter until a clearer view of future business activity emerges.
- US oil prices crashed 54.5% in March, the worst month since 2008, due to coronavirus-related travel restrictions and the oil price war between Saudi Arabia and Russia.
Long-Term Focus: An Endowment's Superpower
Endowment funds offer a unique strength: time. Endowments are, by their nature, perpetual - unencumbered by life expectancy or retirement dates. With an endowment, time is on your side. The unlimited investment time horizon of an endowment provides perspective, fosters patience, and enhances performance.
A fundamental aspect of investing is that returns are unpredictable. The market has its ups and downs. Because endowment funds do not have time constraints, their investors can seek and find long-term returns. It is this long-term perspective that provides endowment decision-makers the ability to be patient in stressful market conditions. With the knowledge that down markets return in time and the assurance that they have time to wait for the upswing, endowment investors can overcome making the reactionary decisions that often lead to devastating results. With this long-term perspective, endowments are managed for maximum return and risk efficiency.
During this unprecedented crisis, HighGround's investment team has been focusing their time on:
- Staying in close contact with our investment managers who are using the market's volatility to increase exposure in companies with strong fundamentals at discounted valuations to their long-term intrinsic value.
- Raising substantial liquidity in all our investment funds to handle all standard periodic distributions as well as any unique cash needs that our clients may have during this time.
- Taking the opportunity to prune recent gains from HighGround's fixed income portfolios and reinvest in public equity at significantly more attractive valuations relative to market fundamentals.
As we enter our third week of working remotely, we are claiming the truth found in Romans 8:28. God is not surprised by our circumstances but is working through them, as always, for His glory and our good. No matter what challenge you are currently facing, please know HighGround is thinking of you and is here to help. Thank you for your continued confidence.