Benchmark Returns for the Period Ended June 2020
| Annualized | ||||
|---|---|---|---|---|
| Quarter | 1 Year | 5 Year | 10 Year | |
| US Treasury Bills (one month) | 0.02% | 1.34% | 1.07% | 0.55% |
| Barclays Capital US Gov’t/Credit Inter Bond | 2.81% | 7.12% | 3.46% | 3.13% |
| Standard & Poor’s 500 | 20.54% | 7.51% | 10.73% | 13.99% |
| Russell 1000 Value (large cap value) | 14.29% | -8.84% | 4.64% | 10.41% |
| Russell 2000 (small cap) | 25.42% | -6.63% | 4.29% | 10.50% |
| Morgan Stanley Europe, Australasia and Far East (EAFE) | 14.88% | -5.13% | 2.05% | 5.73% |
| MSCI Emerging Markets Index | 18.08% | -3.39% | 2.86% | 3.27% |
| Wilshire REIT | 10.56% | -12.30% | 3.98% | 9.22% |
| Source for returns: Morningstar TM as of 6/30/2020. | ||||
Quarterly Commentary
The second quarter saw a significant rebound in equity markets following the jolting declines in the first quarter. Domestic small company stocks (per the Russell 2000 Index) led the way with a return of 25.42%, followed by the S&P 500 with a return of 20.54%. International markets delivered strong performance, with emerging markets (per the MSCI EM Index) returning 18.08% and international developed markets (per the MSCI EAFE Index) returning 14.88%.
While positive numbers are a welcome sight, most asset classes are still below their all-time highs, as seen in the negative returns listed above for the 1-year period. This is expected as the economy continues to grapple with both short- and long-term impacts from COVID-19. It is also valuable to keep in mind that equity markets are forward-looking. Thus, markets often surge (as they did in the second quarter) prior to the resolution of the initial cause of the downturn.
In response to the most significant global pandemic since 1918, fiscal and monetary policymakers deployed the largest ever coordination of financial resources to sustain the economy. Without question, the actions taken in late March and throughout the quarter assisted in stabilizing financial markets and have thus far prevented a health crisis from becoming a more significant financial crisis. Debate remains regarding the need for additional support from policymakers moving forward, which will likely depend on the economic impacts of the continued spread of the virus during the remainder of 2020.
Continuing the string of historic events, the second quarter saw the largest national civil rights protests in decades. From an academic perspective, economic uncertainty tends to highlight structural inequities present in all countries, whether in the US or abroad. Diversity of opinion, and the right to vocalize those diverse opinions, is the bedrock of a thriving democracy.
What comes next in 2020, and how that will impact returns, is anyone’s guess. We will likely see an increased focus on the presidential election and contentiousness from supporters of both candidates. Over the long run, the market has provided substantial returns regardless of the president’s party affiliation. History demonstrates that the greatest market risk is abandoning a well-designed long-term plan in the midst of uncertainty and anxiety.
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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.
