This site is for Institutional Investor use only and not for public use or distribution. The information contained on this site is for informational purposes only without regard to the investment objective, financial situation or specific needs of any particular investor. It is not intended for use by institutional investors in a jurisdiction where distribution or purchase is not authorized.

An “Institutional Investor” means any:

  • bank, savings and loan association, insurance company or registered investment company;
  • investment adviser registered either with the SEC under Section 203 of the Investment Advisers Act or with a state securities commission (or any agency or office performing like functions);
  • person (whether a natural person, corporation, partnership, trust or otherwise) with total assets of at least $50 million;
  • governmental entity or subdivision thereof;
  • employee benefit plan, or multiple employee benefit plans offered to employees of the same employer, that meet the requirements of Section 403(b) or Section 457 of the Internal Revenue Code and in the aggregate have at least 100 participants, but does not include any participant of such plans;
  • qualified plan, as defined in Section 3(a)(12)(C) of the Exchange Act, or multiple qualified plans offered to employees of the same employer, that in the aggregate have at least 100 participants, but does not include any participant of such plans;
  • FINRA member or registered person of such a member; or
  • person acting solely on behalf of any such institutional investor.

By accessing this site you confirm that you are an Institutional Investor, you agree not to forward or make the contents of this site available to any person who is not an Institutional Investor, and you agree to be subject to Victory Capital’s user agreement

Redirect me to

Thank you for your interest in Victory Capital Management. To download this document, please complete the registration form below. You will only need to complete this form one time to access site content.

  • Victory Capital may use my email to send out periodic news, announcements, and product information.

*All fields are required

"Medicine" by the barrel

In Berkshire Hathaway’s 2008 Annual Letter, Warren Buffett wrote: “Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects.” 

Those aftereffects most likely refer to the potential for higher inflation. And if the economic medicine dispensed around the dark days of the Global Financial Crisis was significant, what does that say about the most fiscal and monetary measures deployed this year. So while the Fed tossed markets a lifeline, the potential ramifications should be on the minds of all investors going forward. 

To put things into perspective, consider the barrelful of medicine now being deployed:

• Since mid-March, fiscal and monetary stimulus has provided more than $2.3 trillion in much-needed liquidity to individuals, small businesses, healthcare facilities, and distressed companies. 

• For further context, the U.S. national debt is approaching $24 trillion. Comparing this to the 2019 GDP of $21.4 trillion, the country’s debt-to-GDP ratio is roughly 110%. Relative to other countries, the U.S. ranks in the top 15 countries according to this metric. It’s not always good to be at the top of every list.

• On top of this stimulus, the Federal Reserve kicked in with another round of Quantitative Easing. The Fed lowered the fed funds target rate to a range of 0.00% - 0.25%, pledged to purchase an unlimited amount of U.S. government bonds, announced a strategy to back state and local governments, and promised to buy investment-grade credit for the first time in history.

There are several ways for investors to distill all this. Assuming the inflationary pressures do not become extreme and get out of hand (e.g. what the United States experienced in the 1970s), this barrelful of medicine may prove positive for the global economy despite any short-term pain of a recession. Over the long run, the present value of debt just might decline meaningfully, and policy makers might be able to manage this by hiking rates incrementally and shrinking their balance sheets to curtail inflation. This is likely to be the game plan and should give investors greater faith in the current underlying fiscal and monetary position of the country. 
Yet what does all this mean from a more granular investment standpoint? For starters, if we enter a period of rising inflation, cash and fixed-rate assets would undoubtedly lag. In turn, some of the beneficiaries might be:

1. Companies that exhibit pricing power to offset the cost pressure of inflation. These are likely to be found in the consumer staples, technology, industrial, and energy sectors. With the exception of tech, these are largely considered “value-oriented.”

2. Companies that would benefit from interest rate and yield curve normalization. Examples would include asset-sensitive banks and insurance companies. These, too, are associated with value strategies.

3. Companies that provide essential products and services—most notably healthcare. By their very nature many providers of healthcare are able to pass a significant portion of costs borne by inflation to the consumer. 

Through the middle of June, equities have rallied sharply after the plunge in March, signaling their approval of the Fed’s prescription. And while the popular equity indexes have rebounded, not all companies and sectors are well positioned for a post-pandemic world that looks conducive to higher inflation. Investors should stay alert and not hesitate to re-allocate accordingly where they see value.  

Victory Capital, Inc. is a Registered Investment Advisor. The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice.

©2020 Victory Capital Management Inc.
Consider the investment objectives, risks, charges and expenses of the funds carefully before investing. Download a prospectus or summary prospectus, if available, containing this and other important information for USAA Mutual Funds from, for Victory mutual funds from, or for VictoryShares and VictoryShares USAA ETFs from Read it carefully before investing.

Investments involve risk including possible loss of principal. The value of the equity securities in which the fund invest may decline in response to developments affecting individual companies and/or general economic conditions. Dividends are never guaranteed. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty, and greater volatility. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. You may lose money by investing. There are no guarantees the funds will achieve their investment objectives and strategies may be unsuccessful.

Investments in bank loans may at times become difficult to value and highly illiquid; they are subject to credit risk such as nonpayment of principal or interest, and risks of bankruptcy and insolvency. Fixed income securities are subject to interest rate, inflation, credit and default risk. The bond market is volatile. As interest rates rise, bond prices usually fall, and vice versa. The return of principal is not guaranteed, and prices may decline if an issuer fails to make timely payments or its credit strength weakens.

ETFs have the same risks as the underlying securities traded on the exchange throughout the day. Redemptions are limited and often commissions are charged on each trade, and ETFs may trade at a premium or discount to their net asset value. There can be no assurance that an active trading market for shares of an ETFs will develop or be maintained. The ETFs are not actively managed and may be affected by a general decline in market segments related to the Indexes. The ETFs invest in securities included in, the Index, regardless of their investment merits. The performance of the ETFs may diverge from that of the Indexes. 

LinkedIn, Twitter, and any other social media platform are owned by third parties unaffiliated with Victory Capital. Victory Capital is not responsible for the privacy or security policies at these sites or other third party sites to which they provide further links. For Victory Capital’s privacy policy, please visit the Policies page on Please do not post any information you wish to keep private on this page.

Judgments about a particular security, markets or investment strategy may prove to be incorrect and may cause an actively managed ETF to incur losses.

Victory Capital does not endorse and is not responsible for any ads, content, products, advice, opinions, recommendations or other material of third party sites that may be promoted via advertising within social media properties.

Content on Xchange, the Victory Capital Blog, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date posted and may change as subsequent conditions vary. The information and opinions contained in each post are derived from proprietary and non-proprietary sources deemed by Victory Capital to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

This material does not constitute a distribution, offer, invitation, recommendation, or solicitation to sell or buy any securities; it does not constitute investment advice and should not be relied upon as such.  Investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

Victory Capital means Victory Capital Management Inc., the investment adviser of the Victory Capital mutual funds, USAA Mutual Funds, VictoryShares ETFs, and VictoryShares USAA ETFs. Victory Capital mutual funds and USAA Mutual Funds are distributed by Victory Capital Services, Inc. (VCS). VictoryShares ETFs and VictoryShares USAA ETFs are distributed by Foreside Fund Services, LLC (Foreside). VCS and Foreside are members of FINRA. VCS and Victory Capital are not affiliated with Foreside. USAA is not affiliated with Foreside, Victory Capital, or VCS. USAA and the USAA logos are registered trademarks and the USAA Mutual Funds and USAA Investments logos are trademarks of United Services Automobile Association and are being used by Victory Capital and its affiliates under license.

Find out more about the background of these firms on FINRA's BrokerCheck.

Nasdaq is a registered trademark of Nasdaq, Inc. and its affiliates (together,“Nasdaq”) and is licensed for use by Victory Capital. The product(s) are not issued, endorsed, sold, or promoted by Nasdaq. Nasdaq makes no warranties as to the legality or suitability of, and bears no liability for, the product(s). Nasdaq is not affiliated with a fund or advisor.

For specific questions about your account or other customer-service related inquiries, please contact Victory Capital directly.