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Q1 2020 PSN Top Guns – The Historic Bull Market Comes to a Screeching Halt

The first quarter, which included record equity highs, a bear market, record low Treasury yields, record daily market swings, extreme volatility, and unprecedented monetary and fiscal policies will be a quarter we will not forget and will be used as a historical reference point moving forward. The culprit of all the global economic and market distress was the fast spreading COVID-19 illness.

To try and soften the economic fallout, the Federal Reserve (Fed) cut interest rates to a range of 0% - 0.25% after announcing two emergency rate cuts and enacted unlimited quantitative easing during March. Meanwhile, the U.S Congress passed a historic $2 trillion stimulus package (CARES Act) to try and help households and corporations through the impending recession.

The S&P 500 index fell nearly 34% from its peak in a span of four weeks as the number of COVID-19 cases and deaths climbed. It became clear that the economic impact would be devastating as jobless claims sored by over 3 million during the last week of March. No equity sector was immune to the hasty sell-offs during the quarter, particularly the energy sector (-50.45%) following the oil price war and a drastic decrease in demand. Financials (-31.92%) fell sharply due to the historically low interest rates while other cyclicals like industrials (-27.05%) followed a similar path. Healthcare (-12.67%) and technology (-11.93%) sectors were able to weather the storm a little better, but both fell sharply as well. Below are some of the strategies that make up the PSN Top Guns U.S. Large Cap Growth Universe.

  • Dana Investment Advisors, Inc.: Dana Unconstrained Fundamental Eq. (-2.2% for the quarter)
  • Evolutionary Tree Capital Mgmt: Beagle Leading Innovators Strategy (-5.2% for the quarter)
  • Peregrine Capital Management, LLC: Large Cap Growth (-6.0% for the quarter)


Overseas, Italy and Spain became two of the most severely affected countries of the COVID-19 virus. The eurozone took measures to restrict the movement of people and shut down economies in hopes of slowing the spread of COVID-19. However, the measures had major ramifications on an already fragile economy that grew just 0.1% in Q4 2019 and equity markets (MSCI EAFE index -22.72% during the quarter). Like the Fed, the European Central Bank announced the funding and purchasing of €750 government and corporate bonds. European governments also announced stimulus packages to help support households and corporations during this period of disruption. The following strategies made the PSN Top Guns list for the International Equity Universe.

  • Caravan Capital Management: Caravan Emerging Markets Small Cap (+5.0% for the quarter)
  • Good Harbor Financial, LLC: Tactical Core International Emerging (-4.0% for the quarter)
  • UBS Asset Management: China Equity Opportunity (-5.3% for the quarter)


Treasury yields fell to historic levels as the Fed slashed interest rates and concerns over the global economy grew. Yields on 10-year Treasuries fell from 1.92% to 0.70% during the quarter, while the 2-year yield fell from 1.58% to 0.23%. Furthermore, the 10-year yield on German Funds fell from -0.19% to -0.47%, France’s from 0.12% to 0% and the UK’s fell from 0.74% to 0.29%. The Italian 10-year yield rose to 1.57% from 1.41% and Spain’s also increased to 0.71% from 0.47%.

Investor’s aversion to risk greatly affected corporate bonds (Bloomberg Barclays U.S. Corporate Investment Grade index -3.63% for the quarter) as they underperformed Treasuries (ICE BofA US Treasury index +8.8% for the quarter), with the sell-off being exacerbated by falling liquidity. However, the liquidity concerns eased in March after the Fed announced it would include corporate bonds in its QE program. Additionally, yield spreads on lower quality debt spiked to distressed levels as concerns grew about the health of the global economy. Below are some of the strategies that make up the PSN Top Guns Long Maturity Universe.

  • Fidelity Institutional Asset Mgmt.: Long U.S. Treasury STRIPS Index (+32.8% for the quarter)
  • State Street Global Advisors: 20+ Year U.S. Treasury STRIPS Index (+29.8% for the quarter)
  • NISA Investment Advisors, LLC: 15+ STRIPS Fixed Income (+28.7% for the quarter)


The complete list of PSN Top Guns, and an overview of the methodology, is located here. If you do not have a login, you may register for complimentary access. For more details on the methodology behind the PSN Top Guns Rankings, or to purchase PSN Top Guns Reports, contact Margaret Tobiasen.

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