Benchmark Returns for the Period Ended March 2019
| Annualized | ||||
|---|---|---|---|---|
| Quarter | 1 Year | 5 Year | 10 Year | |
| US Treasury Bills (one month) | 0.58% | 2.05% | 0.68% | 0.37% |
| Barclays Capital US Gov’t/Credit Inter Bond | 2.32% | 4.24% | 2.12% | 3.14% |
| Standard & Poor’s 500 | 13.56% | 9.50% | 10.91% | 15.92% |
| Russell 1000 Value (large cap value) | 11.93% | 5.67% | 7.72% | 14.52% |
| Russell 2000 (small cap) | 14.58% | 2.05% | 7.05% | 15.36% |
| MSCI Europe, Australia and Far East (EAFE) | 9.98% | -3.71% | 2.33% | 8.96% |
| MSCI Emerging Markets Index | 9.91% | -7.41% | 3.68% | 8.94% |
| Wilshire REIT | 16.02% | 19.34% | 9.00% | 18.69% |
| Source for returns: Morningstar TM as of 3/31/2019. | ||||
Quarterly Commentary
Global equity markets were positive across the board for the first quarter, with Real Estate Investment Trusts (as measured by the Wilshire REIT Index) being the best performing asset class, returning 16.02%, followed by US Small Cap (as measured by the Russell 2000), returning 14.58%. Even with the strong performance to start 2019, US and International equity markets are still mostly below their 2018 highs, which demonstrates just how sharply the equity market dropped during the fourth quarter of 2018.
After keeping interest rates steady during the quarter, the Federal Reserve signaled that increases in 2019 are unlikely, barring substantial growth in economic activity. This abruptly changed expectations of two increases in 2019. The Fed’s pause of rate hikes contributed to the strong performance of REITs, which benefit from low rates.
The partial government shutdown which began in December ended in late January after 35 days. It was the longest government shutdown in history. Although there was significant news coverage of the event, it now seems to be a distant memory. As with markets, the only certainty in politics is uncertainty. How did the markets perform during the shutdown? Generally positive, with a return of around 8%, as measured by the S&P 500.
We often cannot see the forest for the trees. This is especially true when it comes to investing, where numerous news outlets, websites, and pundits provide daily detailed analysis of market performance and frequently focus on the negative. Years from now, it is unlikely that the specific dates of the government shutdown will be remembered. We admittedly had to look them up to draft this commentary.
As you review your quarterly reports, you will notice Vanguard mutual funds throughout your accounts. We’d be remiss if we didn’t mention the passing of John Bogle, the founder of Vanguard, and the man credited with inventing index funds for investing. His investment philosophy: “Owning the stock market over the long-term is a winner’s game but attempting to beat the market is a loser’s game.”
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. The index returns above assume reinvestment of all distributions. This information is for educational purposes only and should not be considered investment advice or an offer of any security for sale.
