The Management Team at Los Angeles Capital is committed to the well-being of our clients and employees and prioritizes health and safety above all. We remain focused on our mission of achieving client investment objectives through unique insight, research, technology, and innovation, and are steadfast in our dedication to providing superior client service that you have come to know with Los Angeles Capital.
The Firm’s Dynamic Alpha Stock Selection Model® (the “Model”) is designed to dynamically adjust factor weights based on shifts in investor preferences as a result of changes in market conditions without reacting to short-term fluctuations. Our Investment Team continues to closely monitor client portfolios amid the current volatility to thoroughly evaluate how the Model is adapting to evolving news and the market’s reaction to the COVID-19 (“coronavirus”) outbreak, as well as the prospects for an economic recovery. The global spread of coronavirus and its negative impact on economic output has expanded the Model’s preference for higher quality, large cap growth stocks with strong balance sheets, which tend to be more resilient during economic slowdowns. The Investment Team continues to rigorously monitor portfolio exposures during this period to ensure that they are in line with the Model’s current outlook and well positioned for the current level of market dislocation. Despite the recent swings in market direction, our portfolios have maintained consistent positioning during this period.
In response to the coronavirus outbreak, we have taken precautions in the interests of maintaining a safe and healthy environment, including regularly disseminating guidance to all employees warning about the risks associated with the outbreak, advising of federal, state, and local developments designed to prevent spread and transmission, and implementing guidance issued by local health authorities.
In terms of continuing operations, we are continuing to utilize contingencies in our Business Continuity Management Plan (“BC Plan”), including remote working models within every department under network security protocols and controls that have long been in place. Critical workflows are structured in a team-oriented manner to mitigate any individual personnel risk or absenteeism, and are regularly tested in an isolated work environment as part of our BC Plan preparedness exercises. In addition, we currently support four alternate trading locations with identical configurations as the Firm’s trading desk so that the operational aspects of our investment cycle are not disrupted by employee relocation. We do not currently envision a scenario where the coronavirus would negatively impact our daily core operations and believe that years of preparation on the business continuity front for an event such as this have allowed operations to continue without interruption.
As the current environment presented by the coronavirus continues to evolve and focus begins to shift to recovery and economic reopening efforts, we are beginning to evaluate what a post-coronavirus world may look like for Los Angeles Capital, its employees, and its clients. Our COVID-19 Task Force is actively developing a transition plan, with precaution given to the health and safety interests of all, which will prepare and support Los Angeles Capital’s near-term goals by leveraging existing technology and workflows while shaping a long-term vision of operational availability and continuity.
In the meantime, we are happy to answer any questions you may have about your portfolio, market insights, our operations, or our BC Plan response as we navigate the equity markets, and we will continue to provide updates here or by request as they become available.