Despite Covid Surge and Market Volatility, ISDA Financial Life Portfolio Has Never Been Stronger

By Nick DePersis, Investment Manager, ISDA

Another quarter has ticked by and just when it looked as if we were destined to be headed for some semblance of normalcy, we now appear to be headed for more of the same; at least for now.  The United States has made tremendous strides to not only survive the COVID shutdown, but in many cases, actually thrive.  Many companies have taken advantage of the massive infusion of money by the Fed and a historically low interest rate environment to embark on business capital expansion or even raise additional money in the bond market.  Unemployment has actually neared and at times surpassed the pre-pandemic all-time lows, and wages are rising at a rarely seen pace. 

The spread of the Delta Covid strain has wreaked havoc on recently re-opened business segments, like airlines, restaurants, hotels and casinos.  The other significant impact we are seeing relates to global supply chains and overall shortages of input goods, i.e., metals and micro-chips.  These factors are having two major negative effects, delayed shipping or delivery time and massive price inflation.  Look for the overall delivery costs and prices to be elevated for the near future. 

The stock market continues to be extremely volatile, but moving incrementally higher.  The bond market remains strong with continued interest, even at near all-time low rates.  This fact, paired with the Fed’s commitment to keeping short-term rates low until 2023, stresses our need to continue to be active and agile in our transacting of bonds.  Now more than ever we need to generate alternative investment income for the ISDA.

Through this challenging interest rate environment, I am proud to say that I am not sure that the portfolio of ISDA Financial Life has EVER been stronger.  As the writing of this article, we own an entirely investment grade portfolio, with not a single bond carrying a “junk” rating.  We have also had access to some great new issues of bonds usually reserved for only multi-billion dollar companies that has allowed us to be creative and maintain our recent portfolio yield despite the plummeting interest rates.

Through thoughtful stewardship and active management, I am pleased to present to you the strong 2nd quarter 2021 financials of ISDA Financial Life (refer to page 26).