As investors and fiduciaries, we have a responsibility to acknowledge the unsustainability of gross inequality.

Extraordinary events in human history are almost always mirrors to our societies. The COVID-19 pandemic is no exception.

Some of what we see reflected is reassuring, even inspiring. Millions around the world have accepted sometimes painful curbs on their freedoms to overcome this disease. Health care and other key workers have acted heroically in often dangerous circumstances.

But COVID-19 has also reflected some very uncomfortable realities. It has exposed in a more raw fashion a number of significant fault lines in our society—inequalities in income, economic opportunities, educational opportunities, access to quality health care and criminal justice, among others.

The killing of George Floyd, and of Ahmaud Arbery and Breonna Taylor in the weeks before him and Tony McDade two days after, would have and should have sparked outrage at any time. Amid the tinderbox of economic hardship, frustration, injustice and inequality further unlocked by COVID-19, these events have inflamed some of the most serious civil unrest in the U.S. in more than 50 years.


Across Europe and North America, lower-income individuals or those from ethnic minorities have been up to three or four times more likely to die with COVID-19. They account for a large number of highly exposed key workers, but are also more likely to suffer from comorbidities resulting from poor access to general health care.

In education, for example, the move to at-home and online learning during lockdown has exacerbated existing inequalities between school districts and families with and without access to technology resources.

More than 30 million Americans have lost their jobs, from all sections of society. But just about every study shows that Hispanic and African Americans are substantially more likely to have been laid off or had their wages cut—and on average they also have less in savings to fall back on than white households.

Looking into the U.S. government’s employment surveys, Robert Fairlie at the University of California at Santa Cruz has found that the economy lost 22% of its active business owners between February and April of this year. But the number of African American business owners, already an under-represented group, dropped by more than 40%.

Before the crisis, just over a million minority-owned businesses in the U.S. generated more than $1 trillion of output and employed nearly nine million people. A third were run by women. A McKinsey study suggests they have played an outsized role during the COVID-19 crisis, providing critical support to their employees and communities. As well as being disproportionately vulnerable, then, they are often disproportionately vital to those communities—their failure could worsen existing inequalities.

When these income, economic, educational and health inequalities multiply, they curtail life chances and erode community cohesion. Over time, that creates a fertile ground for prejudice and criminal justice inequalities—and, ultimately, the kind of senseless tragedy exemplified in the death of George Floyd.

Equal Protection

Many of us despair at being able to do little about these deep-seated problems. If we agree that the current situation is neither acceptable nor sustainable, however, then we believe action is required.

This will be a time to reflect upon our responsibilities as citizens, within our communities, families and workplaces. This forum is not the place to comment on that.

But we also have responsibilities as investors and fiduciaries. As investors, we must acknowledge the unsustainability of gross inequality. That means acting as true owners of our portfolio companies, engaging with them to identify the ways in which they promote or impede equal opportunities and sustainable wages in their workforces, their customer bases, their supply chains and their communities.

This is what considering Environmental, Social and Governance (ESG) and sustainability factors is all about. As a firm, we have always believed these to be so much more than just theoretical concepts: Recent events highlight the very real human, societal and economic consequences of the standards we advocate. Ultimately, this is a way in which investors can effect change.

Many will conclude that current financial market valuations do not reflect the concerns expressed here. It’s true that, on a short-term view, the economy will gradually recover from the COVID-19 crisis and central bank liquidity infusions will continue to provide support. But we believe markets and investors will have to account for the costs of unsustainable social inequality eventually, as they look to the long term again.

After all, what is an economy, if not a group of people finding a way to be productive, and to build a good life for themselves, their families and their communities? And what is a society, if it does not give everyone the same opportunity to make the best of their talents, and equal protection for the lives, careers and enterprises they have built?

The economy is society, and society is the economy. We believe none of us can truly prosper over the long term if so many are weighed down by injustice and inequality.

In Case You Missed It

  • ISM Manufacturing Index: +1.6 to 43.1 in May
  • ISM Non-Manufacturing Index: +3.6 to 45.4 in May
  • U.S. Initial Jobless Claims: +1.9 million in the week ending May 30
  • European Central Bank Policy Meeting: The Governing Council announced it is increasing its bond-buying program to €1.35 trillion ($1.52 trillion)
  • U.S. Employment Report: Nonfarm payrolls increased 2.5 million and the unemployment rate decreased to 13.3% in May

What to Watch For

  • Monday, June 8:
    • Japan 1Q 2020 GDP (Final)
  • Tuesday, June 9:
    • Eurozone 1Q 2020 GDP (Final)
    • China Consumer Price Index
  • Wednesday, June 10:
    • U.S. Consumer Price Index
    • FOMC Meeting, Summary of Economic Projections and Press Conference
  • Thursday, June 11:
    • U.S. Initial Jobless Claims
    • U.S. Producer Price Index

Statistics on the Current State of the Market – as of June 5, 2020

Market Index WTD MTD YTD
S&P 500 Index 5.0% 5.0% -0.3%
Russell 1000 Index 5.1% 5.1% -0.1%
Russell 1000 Growth Index 3.2% 3.2% 8.6%
Russell 1000 Value Index 7.6% 7.6% -9.3%
Russell 2000 Index 8.1% 8.1% -9.1%
MSCI World Index 5.6% 5.6% -2.8%
MSCI EAFE Index 7.1% 7.1% -7.9%
MSCI Emerging Markets Index 7.9% 7.9% -9.3%
STOXX Europe 600 9.0% 9.0% -7.9%
FTSE 100 Index 6.7% 6.7% -12.7%
TOPIX 3.1% 3.1% -5.1%
CSI 300 Index 3.6% 3.6% -1.9%
Fixed Income & Currency      
Citigroup 2-Year Treasury Index -0.1% -0.1% 2.8%
Citigroup 10-Year Treasury Index -2.5% -2.5% 9.7%
Bloomberg Barclays Municipal Bond Index 0.0% 0.0% 1.2%
Bloomberg Barclays US Aggregate Bond Index -0.5% -0.5% 5.0%
Bloomberg Barclays Global Aggregate Index 0.0% 0.0% 2.1%
S&P/LSTA U.S. Leveraged Loan 100 Index 1.6% 1.6% -2.2%
ICE BofAML U.S. High Yield Index 3.3% 3.3% -2.6%
ICE BofAML Global High Yield Index 3.6% 3.6% -2.6%
JP Morgan EMBI Global Diversified Index 2.5% 2.5% -3.8%
JP Morgan GBI-EM Global Diversified Index 3.0% 3.0% -4.5%
U.S. Dollar per British Pounds 2.9% 2.9% -3.9%
U.S. Dollar per Euro 1.7% 1.7% 0.8%
U.S. Dollar per Japanese Yen -1.8% -1.8% -1.0%
Real & Alternative Assets      
Alerian MLP Index 13.3% 13.3% -21.0%
FTSE EPRA/NAREIT North America Index 12.5% 12.5% -14.0%
FTSE EPRA/NAREIT Global Index 10.8% 10.8% -15.2%
Bloomberg Commodity Index 1.8% 1.8% -19.8%
Gold (NYM $/ozt) Continuous Future -3.9% -3.9% 10.5%
Crude Oil WTI (NYM $/bbl) Continuous Future 11.4% 11.4% -35.2%

Source: FactSet, Neuberger Berman.