Prepared by Brandon Yee and Tom Connelly
Commentary U.S. Market has a Strong February – For the month of February, developed market index returns were mostly positive except for Canada. The United States and Pacific ex Japan markets recorded the highest returns of 3.86% and 3.08%, respectively. The Japanese market continues to build on its strong recent performance.
Commentary Emerging Markets Continue to Outpace Developed Markets – Emerging markets posted a strong gain of 3.26% for the month, outpacing developed markets. The broader emerging markets are up over 30% in the last year. India and Brazil had the highest returns of 5.91% and 4.36%, respectively. Russia was sharply lower, dropping 6.35%.
Commentary Healthcare and Consumer Staples Post Strong Gains – Healthcare and consumer staples posted the strongest global sector returns of 5.71% and 4.36%, respectively. The energy, materials, and telecommunications sectors dropped slightly.
Domestic Equity Factors
Commentary U.S. Growth Companies Continue Strong Start – In February, domestic growth indices outperformed their value counterparts. Over the past one year and five year periods, value has outperformed growth. Momentum recorded a 3.71% return.
Foreign Equity Factors
Commentary Emerging Mid and Small Cap Companies Build on Solid Recent Performance – In the international developed markets, growth indices outperformed value indices. Smaller companies in the emerging markets performed well in February, posting a return of 4.49%.
Commentary Inflation Begins to Tick Up – Money market funds continue to have very low yields, performing in line with the 3 month T-Bill Index. The yields failed to keep pace with changes in the Consumer Price Index.
Disinflationary / Deflationary Hedges
Commentary High Yield and Emerging Market Bonds Continue Run – The returns of deflationary hedges were positive across the board in February. High yield and emerging market bonds recorded the highest returns among the fixed income categories. The SwissRe Global Cat Bond index inched steadily higher.
Commentary Natural Gas Sharply Lower – Inflation-sensitive investments were mostly positive for the month except for the Bloomberg Commodity Index and natural gas. Natural gas was sharply lower, dropping more than 20%. Gold bullion recorded a 3.53% gain.
Commentary The U.S. Dollar May Have Hit its Peak – The U.S. dollar depreciated against most other currencies over the past three months. The Euro and British Pound were the only currencies to depreciate versus the USD.