Quarterly Commentary, Q1 2025

During the first quarter of the year, the Trump administration implemented many changes, including tariffs, government agency reductions, and a negotiation to end the Russia/Ukraine war. With all these changes, one thing is clear: the stock market dislikes uncertainty. The U.S. equity market reacted negatively; the S&P 500 declined 4.27%, while small-cap stocks were down 9.48% (Russell 2000). Large cap value stocks in the U.S. fared better, up 2.14% (Russell 1000 Value). The highlight was international, with EAFE and emerging markets up in the low to mid-single digits. Interest rates declined, boosting bond returns, particularly quality bonds, as the wavering caused a modest flight to quality.

The macro backdrop in Europe is constructive. Germany and others are increasing spending, specifically on defense, to build up their military. The European Central Bank anticipates a continuation of reducing interest rates. As for valuation, international stocks sell at a 30% discount to U.S. stocks, near a historic low. U.S. consumer confidence declined late in the quarter, but as a contrary indicator, a low point in confidence is historically a more attractive time to invest. On the positive side, retail sales were up modestly in February, and unemployment has hovered near 50-year lows.

The equities in your portfolio finished flat for the quarter, while value and international holdings finished higher. A third of your equity portfolio is invested internationally. In times like these, your diversified global equities give a smoother ride than a more concentrated portfolio, including the S&P 500. Your equity funds hold positions in over 18,000 individual companies globally, and your fixed income has positions in over 7,000 individual bonds.

We remain overweight value, small cap, and quality (profitable) companies, while holding quality bonds. We also monitor the weights of individual fund strategies in your portfolio; if we see an opportunity to rebalance, by definition, selling high and buying low, we will. For instance, we were rebalancing in March 2020, the trough of the COVID-19 sell-off. At the time, we did not have a crystal ball, but we knew the allocation (risk) in the portfolio was out of line with our targets. This adds to your performance while we continuously monitor opportunities.

As always, if you have any questions or would like to discuss your investments, please reach out. Your Resource Consulting Group advisor is here to help.

Resource Consulting Group is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC. All information referenced herein is from sources believed to be reliable. Resource Consulting Group and Hightower Advisors, LLC have not independently verified the accuracy or completeness of the information contained in this document. Resource Consulting Group and Hightower Advisors, LLC or any of its affiliates make no representations or warranties, express or implied, as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. Resource Consulting Group and Hightower Advisors, LLC or any of its affiliates assume no liability for any action made or taken in reliance on or relating in any way to the information. This document and the materials contained herein were created for informational purposes only; the opinions expressed are solely those of the author(s), and do not represent those of Hightower Advisors, LLC or any of its affiliates. Resource Consulting Group and Hightower Advisors, LLC or any of its affiliates do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax or legal advice. Clients are urged to consult their tax and/or legal advisor for related questions.