I worked in portfolio management for about a year and a half at Trust Company. The Trust Company jaf about 4 billion in assets. We did not really use models. We mostly just diversified portfolios and only dealt with investors interested in the long term.
Have professional investors incorporated _any_ serious analysis of pandemic risk and its thousands of possible side-effects into their models? How many epidemiologists have actually collaborated with the banks' quants? That's the trillion dollar question.
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Modern portfolio theory is really not about predicting the likelyhood of any specific type of event. It's about minimizing risk through diversification, and matching risk and reward to individual goals and needs.
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Active investing typically loses to a broad index, especially in the mid term and long term. No need to worry if the banks are correctly pricing assets based on epidemiological advice. Odds are good that a typical active fund would underperform anyway, even with that advice.
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