Benchmark Returns for the Period Ended September 2020
| Annualized | ||||
|---|---|---|---|---|
| Quarter | 1 Year | 5 Year | 10 Year | |
| US Treasury Bills (one month) | 0.03% | 0.83% | 1.07% | 0.55% |
| Barclays Capital US Gov’t/Credit Inter Bond | 0.61% | 6.32% | 3.39% | 2.91% |
| Standard & Poor’s 500 | 8.93% | 15.15% | 14.15% | 13.74% |
| Russell 1000 Value (large cap value) | 5.59% | -5.03% | 7.66% | 9.95% |
| Russell 2000 (small cap) | 4.93% | 0.39% | 8.00% | 9.85% |
| MSCI Europe, Australasia and Far East (EAFE) | 4.80% | 0.49% | 5.26% | 4.62% |
| MSCI Europe, Australasia and Far East (EAFE) Small Cap | 10.25% | 6.84% | 7.37% | 7.33% |
| MSCI Emerging Markets | 9.56% | 10.54% | 8.97% | 2.50% |
| Wilshire REIT | 1.25% | -17.69% | 3.65% | 8.00% |
| Source for returns: Morningstar TM as of 9/30/2020. | ||||
Quarterly Commentary
The third quarter saw equity markets continue their recovery from the March 23rd lows. International small company stocks (per the MSCI EAFE Small Cap Index) led the way, returning 10.25% for the quarter, followed by emerging markets (per the MSCI EM Index) with a 9.56% return. Domestic small company stocks (per the Russell 2000 Index) and international developed markets (per the MSCI EAFE Index) also had positive performance, returning 4.93% and 4.80%, respectively.
Domestic large company stocks, specifically the S&P 500, delivered another strong quarter, returning 8.93%, bringing its one-year performance to a well-above-average 15.15%. Even more striking is comparing the S&P 500 to its international counterpart, the MSCI EAFE Index. Over the past five years, the S&P 500 has outperformed its international counterpart by 8.89% annualized. While we’ve seen this performance deviation before, it doesn’t make it any easier to go through. The most recent example of the S&P 500 outperforming its international counterpart by this magnitude was in the late 1990s. This was followed by a ten-year period where international stocks significantly outperformed the S&P 500. As the saying goes, “History doesn’t repeat itself, but it often rhymes.”
The third quarter also saw an amplified focus on the upcoming presidential election as both candidates make their case to the American people. By design, elections and campaigns tend to strike a chord emotionally, in both a positive and (unfortunately) negative manner. A sign of a healthy democracy is having differing opinions and being able to share them openly. When it comes to equity markets, they are indifferent to the party occupying the oval office. Our advice: try not to let an election that occurs every four years affect the planning you have undertaken for the last 10, 20, or 40 years.
As we enter the tail end of the year, the only guarantee is surprise and uncertainty. Thus far in 2020, we have experienced an impeachment, a global pandemic, unprecedented job losses, social tensions, extraordinary federal aid, a subsequent, ongoing economic recovery, topped off by the undercurrent of an unusually contentious presidential election. This takes another favorite American expression, “May you live in interesting times,” to an extreme.
What hasn’t changed in 2020 is RCG’s commitment to provide guidance to our clients and ensure that today’s headlines don’t impact your finances tomorrow. If you have any questions about the accompanying reports or want to connect with your advisor, please give us a call. We are here for you and will continue to be for years to come.If you have thought about becoming a client or would like a second opinion on your current holdings, please contact us via the button below and we would be glad to assist you in achieving your financial goals.
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.
