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April 10, 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.
Benchmark Returns for the Period Ended March 31, 2025
| Quarter | 1 Year* | 5 Year* | 10 Year* | |
|---|---|---|---|---|
| US Treasury Bills (0-3 months) | 1.05% | 5.03% | 2.61% | 1.86% |
| Bloomberg US Agg Bond | 2.78% | 4.88% | -0.40% | 1.46% |
| Standard & Poor’s 500 | -4.27% | 8.25% | 18.59% | 12.50% |
| Russell 1000 Value (large cap value) | 2.14% | 7.18% | 16.15% | 8.79% |
| Russell 2000 (small cap) | -9.48% | -4.01% | 13.27% | 6.30% |
| Russell 2000 Value (small cap value) | -7.74% | -3.12% | 15.31% | 6.07% |
| MSCI Europe, Australasia and Far East (EAFE) | 6.86% | 4.88% | 11.77% | 5.40% |
| MSCI Europe, Australasia and Far East (EAFE) Small Cap | 3.69% | 3.10% | 9.89% | 5.34% |
| MSCI Emerging Markets | 2.93% | 8.09% | 7.94% | 3.71% |
| Wilshire REIT | 1.01% | 10.23% | 11.15% | 5.33% |
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.
This is not an offer to buy or sell securities, nor should anything contained herein be construed as a recommendation or advice of any kind. Consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. No investment process is free of risk, and there is no guarantee that any investment process or investment opportunities will be profitable or suitable for all investors. Past performance is neither indicative nor a guarantee of future results. You cannot invest directly in an index.
These materials were created for informational purposes only; the opinions and positions stated are those of the author(s) and are not necessarily the official opinion or position of Hightower Advisors, LLC or its affiliates (“Hightower”). Any examples used are for illustrative purposes only and based on generic assumptions. All data or other information referenced is from sources believed to be reliable but not independently verified. Information provided is as of the date referenced and is subject to change without notice. Hightower assumes no liability for any action made or taken in reliance on or relating in any way to this information. Hightower makes no representations or warranties, express or implied, as to the accuracy or completeness of the information, for statements or errors or omissions, or results obtained from the use of this information. References to any person, organization, or the inclusion of external hyperlinks does not constitute endorsement (or guarantee of accuracy or safety) by Hightower of any such person, organization or linked website or the information, products or services contained therein.
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