[Ousfimg_alumni] 1st Quarter Update

[McKee, Jacob]

OUSFIMG Alumni,


Thank you to everyone who showed up for senior sendoff two weeks ago. We hope to see you all again at Homecoming on October 15th.


As mentioned in our previous email, we plan to send quarterly updates.  Attached are the first quarter results for our Sustainable and Traditional portfolios, along with commentary on the group’s current strategy. The group has successfully outperformed our benchmark, the Bloomberg Barclays US Aggregate Bond Index, by 0.36% (Sustainable) and 0.20% (Traditional) respectively.

Our out-performance can be attributed to two strategies the group maintained or implemented throughout the quarter. The group maintained an underweight duration position based on the prediction that U.S. Treasury yields would be rising. This strategy played out as expected with yields on the U.S. 10-Year bond rising 28 basis points from 2.46 on January 2nd to 2.74 on March 29th. We also took an underweight corporate credit position on the expectation that corporate spreads would increase from their historically tight levels. This strategy also worked out in our favor as CDX blew out from 48.46 on January 2nd to 65.56 on March 29th.

Moving forward, the group plans to maintain its short duration position as Treasury yields are expected to continue to rise and the Federal Reserve is expected to raise short-term rates 2-3 more times this year. The group is more comfortable taking an overall neutral position on corporate credit now that CDX is closer to average levels. However, we do see more downside risk than upside potential as it seems unlikely that CDX would move back down into the 45-50 range this late in the business cycle.

If you have any questions or comments, feel free to reach out to me at jm125814 at ohio.edu or any other members of the Executive Board.

Regards,
Jacob McKee


Jacob McKee
Ohio University Class of 2019
Finance, Business Economics
Office of Global Affairs and International Studies
Financial Assistant

(740)485-9241
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