• Gain insight on our current thinking on the economic recovery in this live webinar. Register here

Latest update on our global portfolios in the midst of COVID-19

02042020_Global portfolio update

Latest update on our global portfolios in the midst of COVID-19

For those interested in the up-to-date developments in our global portfolios, we wanted to share the following. As of Monday, March 30, we observed the following: COVID-19 data (daily growth rates in deaths and cases) shows clear improvement in Europe and Australia.

Note: we view deaths data as being the most accurate, with growth rates reflecting the growth rate of the true number of cases lagging 3-5 weeks. We view confirmed cases growth as being a more timely indicator, but its accuracy is ultimately a function of the extent of testing.

Context: when Korean case growth fell below 10 per cent per day on March 4 it took only one week to fall to low-single-digit percentage daily growth rates and remain there subsequently (so far).

In the days prior to March 30 (and compared to the growth rates we were observing two weeks earlier):

  • Europe: death growth slowing; and cases growth slowing materially.
  • Australia: cases growth slowing materially.
  • US: deaths growing strongly still (not surprising given lateness of lockdowns). Cases growth has slowed somewhat, though so too has testing growth (due to limited supplies being prioritised for the caring of patients over the testing of patients), so we exhibit a reasonable dose of scepticism around how meaningful this slowdown is.
    • We also note that some US states are still not in lock-down suggesting they are many weeks/months away from getting into the position of the Europeans.
  • UK: deaths growth accelerating, likely reflecting the initial lazy attitude towards containment 3-5 weeks prior (similar to the US). No material improvement in cases.

Daily growth rate in deaths due to COVID-19

Screen Shot 2020-04-01 at 7.57.23 pm

Source: WHO; MGI

Screen Shot 2020-04-01 at 7.58.40 pm

Source: WHO; MGI

There has been a clear improvement in the EU and Australian virus data since we cut exposure on March 16. There is an alternative history here in which these growth rates did not improve suggesting that lockdowns were not successful and more drastic and prolonged efforts would be required to contain the virus. It was this alternative history we were protecting against with our more drastic cuts to net exposures on March 16.

On this basis, we have updated our exposures to reflect these regional differences:

  • US exposure: remain net zero
  • UK exposure: remain net zero
  • EU exposure: increase longs and trim shorts (in Montaka strategies)
  • AU exposure: increase longs and trim shorts (in Montaka strategies)
  • (Note: we had already adopted this approach for our Chinese exposure in February).

Resulting approximate positioning:

  • Montaka: 20-25 per cent net exposure, up from zero
  • MGF: 30 per cent cash weighting, down from 40 per cent

We still remain conservatively positioned. There are still possible scenarios in which lockdowns are prolonged and the economic disruption intensifies (if we see a resurgence in cases in China and Korea, for example).

The portfolio augmentations described above reflect the improvement we are seeing in the virus data and associated improvement in probabilities of a more positive possible scenario. Such a positive possible scenario looks like the following: the virus is contained over the coming weeks and months and governments find solutions for societies to return to some form of modified normality (as we are observing in China at present, and soon to be Korea). That said, it remains difficult to see life returning back to how it was pre-covid until a usable vaccine was developed (in an estimated 12 month’s time).


Andrew Macken is the Chief Investment Officer of the Montaka funds and the Montgomery Global funds. He established MGIM in 2015 in partnership with Montgomery.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

Why every investor should read Roger’s book VALUE.ABLE


find out more



  1. Robert, increasing ICU capacity will not solve this at all.
    Firstly, you can build as many ICUs and ventilators as you like, but you need Intensive care specialist doctors and nurses to manage them. These people take years to train and don’t grow on trees.
    a critically ill ventilated ICU patient nearly always requires 1 on 1 nursing 24×7.
    Secondly, the mortality statistics from USA and Europe are atrocious : approximately 80% of patients with coronavirus needing mechanical ventilation in ICU die….


    Thanks Andrew, Thanks Roger,

    I am sceptical about the development of a vaccine as s solution to this pandemic. This is because, to my knowledge, no vaccine has ever been successfully developed against any coronavirus. This was reiterated by Prof. David Isaacs (Professor infectious diseases University of Sydney) in an AFR article: https://www.afr.com/policy/health-and-education/why-a-coronavirus-vaccine-may-never-be-found-20200402-p54gke.

    Therefore, perhaps a more realistic alternative solution to the epidemic for our society and our economy is to: (i) isolate the most vulnerable (ii) increase ICU capacity and healthcare resources (iii) allow a gradual return to near usual activities. This would result in the development of herd immunity and thus an end to the epidemic and the economic fallout.

    Kind regards,


    • Hi Robert,
      Thanks for your very interesting observations and logical alternative approach. The question would then become one of: how quickly could ICU capacity be increased to the required level? And how slowly would the population need to be released back into normal, unrestricted society? China and Korea are grappling with these questions as we speak. They have contained the initial outbreak with severe lock downs, but until there is vaccine – which as you say, may indeed never arrive – we need to work out if there is a way to relax the lock downs without a resurgence of cases. The longer the world is in lock down, the larger the economic cost. So all governments are desperate to find a solution here.
      Thanks again, Robert. Stay safe.

Post your comments