Coordinator: Welcome to the Center for Investment Excellence, a production of JPMorgan Asset Management. The Center for Investment Excellence is an audio podcast that provides educational insights across asset classes and investment themes.

Lara Clarke: Welcome everyone. Thank you for taking time to join us today. My name is Lara Clarke, and I'm a Client Advisor and the Head of Public Fund Client Strategy here at JPMorgan Asset Management. 

Today, I'm excited to be joined by my colleague, Jared Gross. Jared recently joined JPMorgan in July and is the head of institutional portfolio strategy, where he is responsible for providing insights and solutions to institutional clients, including corporate and public pensions, endowments and foundations, health care and multi-employer institutions.

Prior to joining us, he spent more than a decade at PIMCO, where he was the head of institutional business development and a member of PIMCO’s investment solutions team. Thanks for joining me today, Jared.

Jared Gross: Thank you, Lara. It’s a pleasure to be here.

Lara Clarke: Great. Over the next hour or so we will touch on some of the key takeaways from Jared's recent paper, where he highlights four themes for improving portfolio performance in the current environment, and over time, and what their implications are for institutional investors.

We’ll explore each theme in greater detail in a forthcoming series of research articles, which can be found at www.jpmorgan.com/perspectives and with that, let's jump right in.

Before we discuss the research series, Jared, can you talk to us a little bit about what you're seeing in the market right now? What trends you're seeing from COVID-19? What do you think will be with us for a while and what are the long-term investment implications?

Jared Gross: Absolutely, thank you, Lara. Broadly speaking, I like many market observers have been somewhat surprised by the market’s resilient in the face of the global pandemic, which seems to be quite a bit less than fully contained and which has lingering economic effects that appear to be quite profound. 

This has been a valuable lesson for all of us that there are very real differences between the markets and the economy. And we are observing in the current environment, a very sharp rebound in financial asset prices, the return in equity markets to pre-COVID levels and the rebound in corporate credit spreads to pre-COVID levels or similar levels.

And at the same time, we're seeing significant residual unemployment, slower growth and the need for extensive official sector support both from fiscal authorities and perhaps even more importantly, from monetary authorities. And I think it is really that element, the strong level of intervention that we've seen, that has allowed the markets to rebound as strongly as they have. 

I think fortunately, at least with respect to monetary authorities, we see no sign that there is a diminishing appetite to continue to support the markets, and to provide liquidity and balance sheet exposure as needed in the face of COVID. Obviously, there is some uncertainty as to the path that the fiscal authorities are taking with respect to additional support. 

The trends in Washington are certainly unclear at the moment, but they seem to swing back and forth between no progress and glimmers of hope for additional fiscal stimulus. So, with that as the backdrop, I think, from an asset allocation standpoint, we are in a somewhat puzzling situation, which is that asset prices are fairly richly valued against an economic backdrop that is troublesome.

And so, we have to reflect that in our investment choices. And I think that's what I've hopefully been able to articulate in these papers is, what are some ways that we can adapt our investment strategies to this new environment? 

Specifically, where do we find attractive, forward looking sources of return? Where can we find meaningful sources of risk reduction and diversification for our portfolios? And where else across the global opportunities set, can we find attractive investment opportunities?

Lara Clarke: Great backdrop, Jared, thank you. Turning back to the recent paper, can you please discuss more the emphasis behind the research series and high level themes that you'll be analyzing?

Jared Gross: Absolutely. So there's been a lot of discussion lately around the 60/40 portfolio and whether it has a future as a guidepost for asset allocators. And I think it's useful to recognize right up front that return 60/40 is really a strawman that we use to describe a broadly diversified portfolio, that invests across a fairly diversified opportunity set of return seeking investments, anchored in equities that also encompasses strategies like real estate, private assets, hedge funds, and other forms of alternatives, which are collectively geared to generate higher levels of long term real return. 

And balanced against that is a diversified portfolio predominantly allocated to fixed income that is designed to provide absolute stability in the form of low volatility, a certain measure of income generation, and also a critical level of risk diversification, anchored in the idea that fixed income is going to be negatively correlated to equity and equity like assets on an ongoing basis. 

So, if that's the standard model for asset allocation, we're in an environment today, where some of those assumptions are going to be challenged. Certainly, on a forward looking basis, the expectation for future returns across many categories of risk assets are going to be lower than they have been in the past. 

Valuations in the equity market are relatively high. And we've got the S&P trading at relatively high P/E multiples, we've got dividend yields that are relatively low and that's true, not just for the S&P, but for other equity sectors as well. And we've got on the fixed income side, a level of yield that is more or less at all-time lows which has a number of effects.

One, it certainly means that the level of income generated by traditional fixed income going forward is going to be challenged. The ability of fixed income to diversify risk will be constrained through those simple reality that if yields fall, they can only fall so far, and the ability of fixed income to continue to appreciate in price will be limited.

And somewhat concerning is by virtue of the fact that we're close to zero boundary and many low risk fixed income asset classes, the bank could actually lose value significantly in certain circumstances if interest rates start to rise. 

And so, the broad portfolio mix that the 60/40 kind of strawman suggests is going to have a harder and harder time going forward to ultimately make good on the objectives that we have as investors. 

And this is a useful moment to remind ourselves that, you know, those long term objectives that matter, we're here to pay benefits to pension beneficiaries to support institutions or charities that need the income and the capital that's been invested in various trusts and the mechanism that we use to achieve those objectives should be flexible.

The long term is always out there, but in the real world, we face it as a series of short term events that we have to address in sequence as they occur, and today's market environment is one such event that forces us to consider changing our views a little bit. So, how do I kind of organize this framework?

Well, there's four themes that we've proposed. The first we call diversifying our hedges. Thinking about the role of fixed income in a portfolio, and the risks that it was intended to offset, recognizing that the ability of fixed income to offset those risks is going to be limited going forward and so, we have to look for new ways to manage risk. 

As a second theme, finding new sources of income. The current market environment poses real challenges, low forward looking returns across public markets are going to make it difficult to reach plan objectives. A diversified allocations are likely to only deliver maybe 4% or 5% at best. 

And pivoting from beta driven total returns to more near term income is one way that we can help to maintain positive performance in the near term and continue to help institutions make good on the benefits they have any obligations that they have in the near term. 

The third theme is to optimize illiquidity. Many institutional portfolios maintain a very high level of liquidity across time, which one can argue is at least at the margin unnecessary. There is some capacity to become less liquid, given ongoing need to make benefit payments or institutional support obligations. 

And also, some of that liquidity is difficult to use effectively. They don't have operational structures in place that allow for sort of nimble rebalancing in times of market volatility. So, the level of liquidity that we choose to operate with is a variable that we can control and there may be some upside to moving at least slightly and prudently in the direction of greater illiquidity. 

And then finally, capital efficiency, which to be frank is shorthand for finding ways to introduce a prudent amount of leverage to our portfolio strategies. There are a variety of ways to do this, but when we step back and recognize that a diversified portfolio of betas is unlikely to deliver the type of long term returns we need, we have various responses.

We can seek higher levels of alpha, we can seek a different set of betas potentially in more exotic places and we should and could consider around the edges adding some leverage as a way to increase returns. But ultimately, the more we can shift our investments to capital efficient vehicles, the more flexibility we will have and the better the outcomes over time.

Lara Clarke: Great. Thank you so much for sharing. I know a number of clients have had discussions on a number of these topics, so I think it'd be great to delve more into the first theme, diversify your hedge. 

You know, recent market volatility has shown us that institutional investors can no longer solely rely on fixed income, revive portfolio protection and income. How should investors be thinking about fixed income given rates (unintelligible) Euro, and what are some of the risks with traditional hedges? 

Jared Gross: I think it's critical as we talk about this topic to recognize that there are really two separate conversations wrapped up in this topic. The first of which applies to institutions that are liability hedgers, and I will broadly categorize that as private or corporate defined benefit plans running LBI programs. 

And the second category would be asset allocators, so non-liability hedgers who are thinking about a broader, long term return seeking portfolio. In both cases, we're trying to focus on risks that can impair a plan (for) an institution's ability to meet its objectives. There are lots of risks in investing, most of which don't rise to the level of something that we would consider hedging. 

There are costs associated with hedging both literal costs in terms of investment expense but also opportunity costs in terms of the inability to allocate capital to higher returning asset classes. So, we don't want to hedge things that are not going to be material over the long horizon. But in these instances, we do find some risks that are worth hedging.

And as we contemplate how we're going to do that most effectively, we want to be thoughtful about the current environment and how it imposes certain constraints on what we do. 

So, to take the first topic, which is liability hedging for sort of the traditional corporate defined benefit plan. Historically, we recognize that pension liabilities in the space are long term in nature, these cash flows are discounted using a corporate bond based yield curve, and so the dominant sources of risk in the liability itself, at least in the measured value of that liability, will be interest rate sensitivity, or duration and corporate credit spread sensitivity. 

And so, the natural hedge to that is to own a portfolio that is rich, in both of those risk factors and that has traditionally been a portfolio predominantly allocated to high quality, long duration corporate bonds, with significant allocation to treasuries as a completion element. This asset solution, however, carries certain key risks that are not in the liabilities. 

Specifically, the bond portfolio, which is highly concentrated in corporate credit, is exposed to the risk of downgrades out as investment grade or potentially even defaults directly from the portfolio that would deplete the capital and cause losses that are not going to be borne by the liability. 

And in an economic environment, such as the one we are in where the corporate credit market has a longer than ever duration, has a higher percentage of triple B’s with elevated levels of default risk and lower recovery and the high yield market with higher levels of liquidity costs and IG issuing from leverage at all-time highs, and on and on and on,.

The level of corporate credit risk that is being sustained in those portfolios is quite high, so, that's something we should be very careful with. Similarly, on the Treasury side of the portfolio, you have a diversifying asset that is being carried at a very high cost, in terms of its opportunity costs relative to other options who are earning essentially nothing and treasure with these days and their ability to diversify is increasingly limited. 

So, from both directions, that portfolio is going to be challenged going forward. And so, one of the ways that we think plans should consider improving the situation is to find ways to diversify their LBI programs using high quality long duration assets. And the question is, where do you find additional high quality long duration assets?

Well, one of the areas that we would strongly suggest to look is in the securitized markets. Pension funds have, by and large moved away from the securitized markets over the last 10, 15 years as they have moved into LDI, for some good reasons. Some of the bonds in the securitized market do not have the risk characteristics that you would want in an LDI portfolio, but some do.

And it is quite possible to build a diversified long duration portfolio of securitized assets that can serve as a meaningful risk diversifier within an LDI program. They have higher yields than treasuries with a similar level of credit quality, essentially triple A. They have similar yields to corporates but are essentially default remote given the backing of the (GLC). 

And analysis suggests that up to 20%, 25% of an LBI portfolio could be invested in long securitized assets that would achieve an optimal outcome in terms of tracking error and risk and return relative to liabilities. So it's a very rich topic for further discussion, but that is one way that plans can consider diversifying their hedges.

On the other side, talking about asset allocators think more about public plans, nonprofits and multi- employers and just recognizing that we have relied on fixed income to be the key diversifier of portfolios and it's done a good job. To some extent fixed income is a victim of its own success. 

When we look at what happened in March and April, you saw risk assets fell off sharply, and fixed income did very well, that is precisely the outcome that, if not, we were hoping for at least that we had planned our asset allocation around. 

However, given where we are today, with equity prices having gone back up, the fixed income, particularly Treasury yields remaining very low, there's very little return potential going forward, the low yield represent the high opportunity costs in the context of a portfolio needing to generate long term returns and the increasing duration of fixed income is a risk if in fact, correlations don't hold. 

And in the next sell off, we get a selloff in fixed income as well. And they seem remote as a possibility but let’s recognize that when we have seen that in the past, if you want to use the generic term sort of stagflation as a description of the environments, but you can basically say, low nominal returns and low nominal growth, higher than expected inflation, recognizing that we have a Fed right now that is actively trying to spur inflation, it's not that remote of a possibility. 

So, this is a cause for some concern if our fixed income allocation is going to be the majority of our risk management. So, what do we do about this? Well, again, at a relatively high level, there are some potential solutions.

Within the Treasury market, it probably makes sense to consider maybe smaller allocations, but further out on the curves, where there still is some potential for price appreciation in the event of a selloff. Outright reduction of equity beta, particularly if we can find and identify attractive investment opportunities elsewhere in the markets that have lower correlation to equities, looking to potentially hedge equity volatility directly. 

That can be done inside a portfolio or at the plan level through the use of derivatives and ultimately adjusting allocations and potentially be risking a little bit if only temporarily. So, there are a variety of solutions for asset allocators to think about as substitutions for the traditional role of fixed income. 

And then just very briefly touching on inflation. Generally speaking, inflation is not a risk that we choose to hedge in the sense that we want some asset that will offset rising inflation in the short term. What we choose to do is invest in assets that will outperform CPI and deliver positive real returns over the long term. 

And in that respect, there is a risk today that traditional liquid market asset classes because of the low forward looking returns provide a significantly smaller margin of error relative to a potential spike in inflation. So we have to be careful about just assuming that the standard portfolio allocation will deliver on that promise. 

There are some potential solutions again, thinking within the fixed income sector, becoming more active and dynamic moving down the yield curves, with more floating rate exposure and up into higher spread content sectors within the equity markets. 

Generally speaking, equities are less concerned by inflation and other asset classes, but certainly employing active management to allocate across sectors and companies that are going to be less impacted by a more inflationary environment should that occur. 

And then most significantly, looking across the spectrum of real assets and recognizing that real assets is a very rich category, and deserves probably to have a larger footprint within most asset allocations, particularly if we can encompass not just traditional liquid market real assets like (FIPS) or commodities, which have a lot of volatility and potentially limited returns, but less liquid higher returning real assets.

You know, core real assets, like real estate, infrastructure, transportation, and so forth is really embedded with a certain model of inflation repricing across time in their business models, unlike many other categories.

Lara Clarke: Terrific. Thanks, Jared. I certainly appreciate your insights and leads seamlessly into looking at your second theme, finding new sources of income. How should clients be thinking creatively about yields and diversifying strategies? 

Jared Gross: So, when we think about generating the returns, we need to make good on our objectives over the long horizon, total return is the most important goal. But we do also want to recognize that we have obligations across time, benefit payments, institutional support and so forth, that perhaps put a thumb on the scale, in favor of strategies that can also deliver current income.

And to use maybe two somewhat extreme examples, a high yielding fixed income portfolio and potentially a long lock private equity portfolio. 

Certainly, the private equity portfolio would be expected to have a much higher long term total return and in many respects is a terrific investment. But you know, it also may have a J curve, it may have some uncertainty over the timing of not just the return of capital but also the drawdown and its initial investment phases, which can pose challenges to managing through a difficult market period.

Whereas something that provides steadier, higher levels of current income not only helps to meet benefit payments as they come due, but that provides additional flexibility with respect to rebalancing, with respect to making opportunistic investments across time as markets move. So, there's a variety of ways in which the income component and total returns is worth thinking about and focusing on. So, how do we look to a portfolio to improve the (unintelligible) of income overall? You know, this is a very broad based topic, and there are a few components of the asset allocation where we can’t creatively think through some of these choices.

So, within equities, certainly half of the calculated benchmarks have not been delivering a lot of income lately. We know the dividend yield on most of the major benchmark is low, but there certainly are equity strategies to deliver higher levels of dividend and income. 

We can look within segments of the equity market, specifically preferreds, as a way to significantly increase income convertible bonds kind of a little step further out there. And certain segments of the REIT market have very attractive income characteristics. 

So, against the backdrop of relatively low forward looking beta returns, that prospect of pivoting to something that is going to deliver more current income should be attractive. 

In the fixed income sphere, obviously, moving from traditional low duration for passive core strategies where you have relatively large, fixed allocations to lower yielding treasuries, or agency mortgages, and replacing some of that with more spread sensitive sectors and across a broader fixed income opportunity set, so multi-sector credit strategies would of course, be a logical option, there. 

Targeted exposures to high yield or emerging markets, particularly emerging markets, local, things like bank loans, and structured credit, also has some attractive income producing opportunities and characteristics.

In the real asset space. I touched on this a little bit earlier, but you have certain asset classes, particularly (tips) and commodities, that produce extremely low levels of current income. That's not typically why investors would hold those assets, but, again, as we're trying to look across the full spectrum of the portfolio for opportunities, real assets do offer some alternatives against as I mentioned earlier, specifically core real assets, you know, lower in liquidity, but significantly higher in both income and return potential. 

Infrastructure being a natural candidate, transportation assets being a natural candidate, and certainly core real estate being a natural candidate. And then finally, within private credit, which is, you know we’ve obviously seen a lot of attention recently, there are certain strategies that have lower levels of expected income in the more opportunistic or distress strategies. 

And there are those that have higher levels of expected income, particularly in direct lending, and other forms of private credit expansion. So, across an entire portfolio, there's a very rich opportunity set of income generating strategies that we can focus on, and the ability to really transform a portfolio's capacity to support the ongoing payment of benefits to support the operational flexibility around rebalancing. 

And ultimately, to become more opportunistic, and flexible in allocating across time. I think income has been sort of undervalued as an attribute across many institutional portfolios for a long time and hopefully, that will start to change.

Lara Clarke: Terrific, thank you. I know we could spend some more time on this theme, but you mentioned a few private markets. And as we know, illiquidity is a concern for many institutional investors, particularly those with funding issues. So, this used to be even more impacted today with the recession and pandemics. How do you alleviate concerns for investors over comparative illiquidity of certain asset classes?

Jared Gross: Illiquidity is a really interesting topic. I think, you know, many investors certainly not all, but many maintain a portfolio that is across its full scope of the asset allocation, highly liquid. And against that we balance the level of ongoing cash flow means that the portfolio has to support.

So, in the case of a pension fund, think about the level of ongoing benefit payments, net of contributions as a simple exercise to sort of think about that topic. And the portfolio is 80% allocated to highly liquid strategies, either daily liquidity commingled vehicles, or separate accounts that offer the prospect of very high liquidity on one hand, then they have significantly more liquidity than they would ever be likely to need over a short period of time. 

And there are moments in time when higher levels of liquidity are necessary. We can think about a pension risk transfer or a lump sum payout to plan beneficiaries, something like that, but those are usually known well in advance. And there's often some discretion over the need and timing of executing those types of transactions. 

So, the bottom line is, I think a majority of large institutional portfolios operate with a level of liquidity that is in excess of what they need. Now, that's prudent to some extent, we would certainly not suggest that anyone operates right to the very edge of what they might need. But I think there's a lot of room to work with you to put it simply. 

And so, when we think about the deployment of illiquidity to generate higher levels of return, how have we historically looked at that? Well, again, I think there historically has been a little bit of a barbell approach here, which is, on one hand, very liquid strategies, and on the other, a perception that most illiquid strategies are in the highly illiquid, fixed, you know, long lock, private, etc., and they have to justify that illiquidity by delivering extremely high levels of long term return. 

But at the same time that illiquidity really constrains how much money we can allocate. I think as the markets has evolved, what we see today is a much more complete spectrum of investment vehicles that are correctly align with the underlying opportunity set and cover a much greater and much broader opportunity set, than we used to see. 

There used to be a sort of middle ground of investment opportunities that were too illiquid for daily vehicles, and in some cases, even for hedge fund strategies that offered quarterly access to capital. But they didn't have high enough returns to justify including them in long lock private strategies, but we're seeking high teens style IRRs.

Today, we've got a much more nuanced spectrum of investment strategies with a much greater specificity in terms of their structuring, in terms of their initial capital draw, how long they're locked, what sort of liquidity they offer at the end of the lock, and so forth. 

So, as an investment premise, we can take advantage of this and build portfolios that have less liquidity than we have historically used, but significantly higher returns. And again, in a market environment where beta returns are going to be low and the level of diversification that we've been able to achieve from fixed income, and the level of yield that we've been able to achieve from fixed income is going to be limited. 

You know, these types of less liquid strategies, particularly those that our income focused are really interesting. And there's a variety of alternative strategies that have moderate liquidity, but high single digit income targets, even in the current environment. And that's something that I think it would be a huge mistake not to take a close look at, because that is going to be a real tailor to meeting long term objectives if we can identify an investment in that matter.

So again, in the low return world, I think investors may be forced to become a little bit less liquid, if they're going to meet their objectives. We just want to make sure that it's done thoughtfully and makes use of the full opportunity set wherever possible.

Lara Clarke: Great, thank you, Jared. We're now going to delve into our fourth theme. And we're kind of in a strained environment, investors frequently confront the difficult choice, increase risk, or reduce return targets. Sometimes there are serious consequences for their sponsor organizations.

Jared, what are some of the benefits that can potentially be derived from maximizing your portfolio's capital efficiency?

Jared Gross: This is an interesting topic and probably one that is a little more conceptual than the others that I've addressed. The idea behind becoming more capital efficient, is relatively straightforward. We'd love to live in a world where a diverse portfolio allocated across most market beta sectors would deliver high single digit returns with modest volatility. 

Unfortunately, I think that's not a good description of the world we're in right now. And so our objectives and ultimately, the demands that we place upon these pools of capital have not changed to the same extent. We still would like to achieve relatively high levels of return and do so without excessive risk. 

So, capital efficiency, you can think of it in two ways. One more sort of theoretical and one perhaps more pragmatic. At the theoretical level, you know, we recognize that one of the benefits of leverage is that you can increase long term returns. And if you do it prudently and appropriately diversifying ways you can do so without dramatically increasing risk, because the ability of portfolios to become more efficient in total is a very real thing. 

As an aside, I would mention many investors have taken a close look at risk parity strategies, you know, either as a form of hedge fund investing was more of a conceptual framework. But the basic idea behind it is that if you can lever asset classes to a similar level of risk, you can achieve higher returns with greater diversification at the beta level and ultimately, that is a more efficient structure. 

Again, many people have gotten comfortable with that as a discrete strategy for someone else to manage. But there's not a particularly great leap to recognizing that, at least at the margin, we can deploy that same idea at the plan level. 

We can add overlays to fixed income strategies to increase the weight of our fixed income portfolio relative to other risk assets. And that's one very effective way to increase (unintelligible) leverage and hopefully do so in a way that's not particularly attitudes to overall risk.

We can also look to specific strategies that deploy leverage. So, of course, many private strategies do this within the investment program. You know, there's other strategies like sort of a classic 130/30 or more of a portable alpha program that deploy leverage mixed between beta exposures and alpha generation in a way that enhances the ability to (unintelligible) portfolio to add return on its limited capital base.

And then there's a more pragmatic sense of capital efficiency, which is simply avoiding pools of what I might refer to as inefficient capital. And things like passive beta exposures, particularly in equity, where you can easily replace some of that risk with a derivative position, earn the same beta returns and free up capital to do other things, hopefully generating higher levels of return. 

So, the broad idea here is to recognize that we have a toolbox of techniques that will allow us to apply leverage within strategies and across the portfolio. We can improve the overall level of return which in and of itself is critical. We can do that in ways that are not inherently risk reducing, or at least relative to the returns that they generate are more efficient. 

And I think collectively, that is a toolbox that we need to be using in this environment to help make good on the obligations that we have promised.

Lara Clarke: Perfect. Thank you, Jared. I appreciate your insights, shifting tax a little bit here. Jared, with the presidential election fast approaching, what are your expectations for institutional investors under either one, continuation of the Trump/Pence Administration and policies or two, a Biden-Harris Administration?

Jared Gross: So, that's a great question and it's a tough one to answer I think, for a lot of obvious reasons. But the outcome set, it seems to me to be there's a few possibilities. You have Trump winning, retaining the Senate and the House of Representatives stays Democratic.

I think most observers would feel that the House moving republican is quite unlikely. You have a Trump victory and the Senate going Democratic, although that seems relatively unlikely because the odds of Trump winning but not carrying the Senate, given that authority, talking to Republicans is fairly low probability. 

And then you've got a Biden victory with the Senate and the House. So, unified government for the Democrats, or Biden victory, the Senate stays Republican and the House, stays Democratic. So, you sort of have divided governments in most scenarios except for the Democratic sweep.

And I think, generally speaking, divided government is a continuation of what we have seen already, which is the Trump Administration will govern through executive action. And in areas where they have a lot of flexibility in that respect, so trade, potentially immigration, things like that, you would see continuation of current policies, but other than that any major policy initiatives would seem to be low probability. 

And I think the same is true for a Biden presidency with a Republican Senate, relative limited scope of action. Although, again, I think it may be that there's greater possibilities for constructive bipartisanship under Biden than there has been under Trump, although that's debatable. 

So, you know, what does it mean, from a policy perspective, if you have a Democratic sweep, you're going to have higher taxes, you're going to have probably a greater level of infrastructure and sort of fiscal support for the economy, probably going to have a more mild tone towards this policy towards China, and potentially a more mild tone towards regulation of the tech industry.

Although, I think that's considered to be a relatively debatable points, different Democratic constituencies have wildly different views about what to do about Facebook, etc., etc. So, I think in the macro sense, you have much more fiscal activity under a Biden administration, probably more China volatility under a Trump administration. 

Outside of that it's relatively hard to handicap. I think history shows that, although I think that it is generally perceived that the Trump Administration has been sort of business friendly, and we can obviously observe that the stock market has done well under Trump.

Historically, the stock market has tended to do just fine under many Democratic administrations as well. So, it's unclear that there's any sort of presumption one should make about the sort of passive markets going forward. 

Lara Clarke: Thank you, Jared. Certainly, a lot to consider here on the horizon. I want to thank you for your time today, and we look forward to the B’s tailed research pieces that will be following on the four themes, including the diversifying your hedge, which recently came out.

Thank you to everyone and we hope you enjoyed today's call. If you need any additional information on anything that was discussed, please reach out to your JPMorgan client advisor. 

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