The Covid-19 pandemic has affected some sectors more than others. This impact was immediately reflected in changing exposures to three of the style factors in our fundamental multi-factor risk models.

The notion that markets “climb a wall of worry” is a commonly held view in the investment world. Eventually, the concerns of those investors fade and they become risk-tolerant themselves.

Did investors overreact in March? Are they overreacting now? What was investor sentiment in the quarter leading up to the event, and were there any early warning signs?

There is no denying the psychological impact that the word “pandemic” can have on investors globally, especially when it is followed by headlines containing the words “global recession".

The well-publicized fall in equity markets may have overshadowed a potentially much more impactful risk from the corporate bond market – that of fallen angels.