The path most taken last year was to do nothing different. It surprises us when we hear the low turnover of many people’s accounts. The path less travelled centered upon the fact that a pandemic might not be a temporary occurrence, the Ukraine/Russia clash would be a passing disagreement and that the quantitative easing of unprecedented global amount would stay in the system.
In our manager reviews, the most surprising statement has been that they planned to do just what they have been doing for decades and that they reviewed the holdings and made changes which resulted in average turnover or less than prior. Are the markets the same today as before 2012, 2007 or even 2000?
Investors need to know what to expect from a manager. No client should be “surprised” by performance. Part of that is simple math. The public equity market continues to shrink mainly due to the prolific increase in private deals. The Russell 5000 grew to over 7500 names in 1998 but as of 12/31/21 was about 3,687. Much of the consolidation occurred in large companies.
The path less taken at Clearbrook was highlighted by active fixed income management, an area usually too boring to make changes, but the quantitative easing changed relative value significantly along with the shape of the yield curve. When you consider that Europe is a large exporter, the war in the Ukraine and resulting energy price spike and supply channels had a large impact on currencies.
The road less taken usually manifests itself in changes that are not normally done during times not normally seen.