Each quarter, we bring you the “Quarterly Market Review”. This provides a summary of performance across world markets. While we don’t base our investment strategies around short-term market movement, we do pay attention to these trends. By providing information about US investments, foreign investments and various asset classes, we hope to show you the benefits of maintaining a diversified portfolio.
This quarter, you’ll notice the performance of the world stock market (page 4) trended upwards slightly. Over the past twelve months, (page 5) you’ll see that upward slope had some volatility around the beginning of this year, but the overall trajectory is gentle growth.
As we wrote in last month’s newsletter, eight plus years of positive stock market returns are above average. Historically, this would indicate a below average return is coming soon. We won’t get into our philosophy of diversified, disciplined investing; but we do want to remind you that down markets are natural, and included in the investment projections we use when crafting a personal investment policy for our clients.
In the fixed income world, the yield curve remains flat in longer maturities. This is shown in the chart below:
Traditionally, short-term yields are lower than long-term yields, because you would expect to be compensated for taking on more risk in the form of longer bond maturity. When the curve “flattens”, investors in the longer maturities are not being rewarded for taking on longer bonds. Our portfolios currently hold short and intermediate-term bond funds.
Lastly, this quarter’s review includes a short article on the “Total Cost of Ownership”. This is an interesting look at how the internal expenses of mutual funds impact performance. For reference, the average expense ratio of the mutual funds we use is .22%.
As always, please reach out if you would like to discuss these topics or your personal financial planning.
Click here to view the entire Quarterly Market Review