Fun Facts Newsletter | October 2013

The stock market pendulum swung widely in our favor both in the month of September and the third quarter of 2013. The asset classes that were “laggards” in the Asset Class Leaders and Laggards table that we introduced to you last quarter swung over to become “leaders”. More importantly, the month of September, which is historically a bad month as we also reported to you last month, turned out strongly positive. This all proves once again that trying to forecast or predict the stock market is a futile exercise!

For the time period ending September 30, 2013, U.S. small caps continue to lead the global stock market with returns of almost 30%, US small value style stocks are in second place at about 27% and US midcaps are third at about 24%. Remember that these are smaller dollar allocations in your portfolio, so the impact is not as high, but we’ll take it! International stocks have made significant ground catching up with US stocks(almost), with international stocks up 15% vs. 19%+ for US large company stocks. Overall, the MSCI ACWI IMI index (you remember that one, don’t you?!) is up 18.65% for the year.

Why isn’t your portfolio up 20%? Remember that bonds have had slight losses year-to-date, in the 1% to 4% range, inflation adjusted bonds are down about 7%, commodities and international emerging market stocks have losses, and US real estate is “only” up about 2.5%. These asset classes still play an important role in your portfolio. Our low volatility funds have met our objective of providing better returns than bonds with lower volatility than stocks, but those fund returns have been in the 0% to 5% range.

Speaking of bonds, tax-free municipal bonds in the intermediate maturity range have higher interest rates than taxable corporate and government bonds. This is an anomaly that has been in place for some time and we thought would correct itself, but it has not. Therefore, we are moving some clients in low tax brackets from taxable to tax-free municipal bond funds.

I am pleased to announce that Donna Ellis and Kathy Blain have both been accepted in to membership of the National Association of Personal Financial Advisors (NAPFA) and granted the NAPFA Registered Financial Advisor designation. NAPFA has some of the industry’s most rigorous education and training requirements and NAPFA’s continuing education requirements exceed those of any other association of financial advisors. Please join me in congratulating Donna and Kathy on this accomplishment!

View/Print the Fun Facts Newsletter