Quarterly Market Review Market Slides. Fourth Quarter 2015

Transcription

1 Q4 Quarterly Market Review Market Slides Fourth Quarter 2015

2 US Stocks In a turnaround from the previous quarter, the US equity market recorded positive performance. Small caps underperformed large caps, and value indices underperformed growth indices across all size ranges. Ranked Returns for the Quarter (%) Growth Marketwide Value 5.64 Small Cap Growth Small Cap Small Cap Value World Market Capitalization US Asset Class 1 Year 3 Years* 5 Years* 10 Years* 53% US Market $22.1 trillion Marketwide Value Growth Small Cap Small Cap Value Small Cap Growth the management of an actual portfolio. Market segment (index representation) as follows: Marketwide (Russell 3000 Index), (S&P 500 Index), Value (Russell 1000 Value Index), Growth (Russell 1000 Growth Index), Small Cap (Russell 2000 Index), Small Cap Value (Russell 2000 Value Index), and Small Cap Growth (Russell 2000 Growth Index). World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. Russell 3000 Index is used as the proxy for the US market. Russell data Russell Investment Group , all rights reserved. The S&P data are provided by Standard & Poor's Index Services Group. 2

3 International Developed Stocks In US dollar terms, developed markets outside the US underperformed the US equity market but outperformed emerging markets indices. Small caps outperformed large caps in non-us developed markets. Ranked Returns (%) Value Local currency US currency Value indices underperformed growth indices across all size ranges in non-us developed markets. Growth Small Cap World Market Capitalization International Developed 37% International Developed Markets $15.4 trillion Small Cap Value Growth the management of an actual portfolio. Market segment (index representation) as follows: (MSCI World ex USA Index), Small Cap (MSCI World ex USA Small Cap Index), Value (MSCI World ex USA Value Index), and Growth (MSCI World ex USA Growth). All index returns are net of withholding tax on dividends. World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. MSCI World ex USA IMI Index used as the proxy for the International Developed market. MSCI data MSCI 2016, all rights reserved. 3

4 Emerging Markets Stocks In US dollar terms, emerging markets indices underperformed developed markets, including the US, during the quarter. Small cap indices outperformed large cap indices in emerging markets. Ranked Returns (%) Small Local currency US currency Value indices underperformed growth indices in emerging markets across all size ranges. Growth Value World Market Capitalization Emerging Markets 10% Emerging Markets $4.0 trillion Small Cap Value Growth the management of an actual portfolio. Market segment (index representation) as follows: (MSCI Emerging Markets Index), Small Cap (MSCI Emerging Markets Small Cap Index), Value (MSCI Emerging Markets Value Index), and Growth (MSCI Emerging Markets Growth Index). All index returns are net of withholding tax on dividends. World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. MSCI Emerging Markets IMI Index used as the proxy for the emerging market portion of the market. MSCI data MSCI 2016, all rights reserved. 4

5 Fixed Income Interest rates across the US fixed income markets increased in the fourth quarter. The yield on the 5-year Treasury note gained 39 basis points to end the quarter at 1.77%. The yield on the 10-year Treasury note increased 22 bps to 2.27%. The 30-year Treasury bond added 14 bps points to finish with a yield of 3.01%. The short end of the yield curve experienced the largest increase in yields during Short-term corporate bonds declined 0.14% during the quarter but gained 1.01% for the year. Intermediate-term corporates fell by 0.42% during the quarter but climbed 1.08% in Short-term municipal bonds returned 0.08% for the quarter and 1.21% for the year. Intermediate-term municipal bonds returned 1.26% for the quarter and 3.28% for the year. 2 US Treasury Yield Curve (%) Year US Treasury 10 Bond Yields across Issuers (%) 3.57 State and Local Municipals 2.82 AAA-AA Corporates 30 12/31/15 9/30/15 12/31/ A-BBB Corporates BofA Merrill Lynch Three-Month US Treasury Bill Index BofA Merrill Lynch 1-Year US Treasury Note Index Citigroup WGBI 1 5 Years (hedged to USD) Barclays Long US Government Bond Index Barclays US Aggregate Bond Index Barclays US Corporate High Yield Index Barclays Municipal Bond Index Barclays US TIPS Index the management of an actual portfolio. 1. Barclays Short and Intermediate US Corporate Bond Indices. 2. Barclays Short and Intermediate Municipal Bond Indices. Yield curve data from Federal Reserve. State and local bonds are from the Bond Buyer Index, general obligation, 20 years to maturity, mixed quality. AAA-AA Corporates represent the Bank of America Merrill Lynch US Corporates, AA-AAA rated. A-BBB Corporates represent the Bank of America Merrill Lynch US Corporates, BBB-A rated. Barclays data provided by Barclays Bank PLC. US long-term bonds, bills, inflation, and fixed income factor data Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). Citigroup bond indices 2016 by Citigroup. The BofA Merrill Lynch Indices are used with permission; 2016 Merrill Lynch, Pierce, Fenner & Smith Incorporated; all rights reserved. Merrill Lynch, Pierce, Fenner & Smith Incorporated is a wholly owned subsidiary of Bank of America Corporation. 5