When considering the Ukraine/Russia crisis, Canon Capital’s Wealth Management team primarily considers different scenarios and evaluates the risk to both our portfolio construction and specific investments. The goal is to minimize downside exposure while remaining in a position to take advantage of upside gains. We have particularly looked at our investments’ exposure to interest rate risk, as this crisis has the potential to accelerate measured inflation and central banks’ reactions to those readings. Commodity exposure was also scrutinized at our most recent session, as Russia has a particularly outsized presence in energy and metals. While a reasonably contained conflict will probably have minimal impact on corporate earnings, companies with specific exposure to the Russian economy may be impacted. Should the conflict escalate, there is potential for a greater impact on macroeconomic factors, and though we think it unlikely at this juncture, it is still a scenario that we will be vigilant for and take appropriate steps to adjust for, if necessary.
Bradley Barnhorst, CFA, is a Canon Capital Investment Advisory Committee Member, Chair of Finance at DeSales University, and an Author.