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ISC Model Update - March 2020Submitted by The Wealth Consulting Group on May 11th, 2020
ISC Model Updates March:
Markets continued their sharp reactions to COVID-19 sending major indices into bear market territory. The S&P 500, shown below, experienced an almost 34% decline from the February closing peak to the March 23rd closing trough.
However, the back half of the month saw a reversal off the lows on the backs of radical action from central bankers and fiscal authorities. The size of the Federal Reserve’s balance sheet has again exploded higher and rates were quickly cut to the zero bound in effort to ease liquidity concerns and stabilize asset prices. By March’s end, the S&P 500 had rallied over 15.5% off the lows.
Flash in the Pan: Update
The U.S. continues its relative outperformance relative to international markets.
Small cap stocks were among the hardest hit during the month of March and continue their trend of underperformance versus large cap.
And growth continues to outperform value by almost 11% for the quarter!
In keeping with the trends discussed in prior months, the dollar staged an about-face and finished the quarter up 3.4%. It was a rocky road to get there particularly once the potential for monetary and fiscal support came into view in late February, but on further reflection, market participants likely realized our stimulus wasn’t happening in a vacuum as policy makers around the globe mobilize to combat the economic fallout of the coronavirus.
The ISC Growth & Income Benchmark is a blend of 33% S&P 500, 9.6% S&P 400, 2.4% S&P 600, 10.8% MSCI EAFE, 4.2% MSCI Emerging Markets, 37% Barclays Aggregate, and 3% Cash.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.
The prices of small and mid-cap stocks are generally more volatile than large cap stocks.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
Value investments can perform differently from the market as a whole. They can remain undervalued by the marker for long periods of times.
WCG Wealth Advisors, The Wealth Consulting Group and LPL Financial are not affiliated with any of the entities referenced.
The S&P 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through chanced in the aggregate market value of 500 stocks representing all major industries
The S&P Growth and Value Indices are companies in each U.S. index that are split into two groups bases on price-to-book ratio to create growth and value indices. The Value index contains companies with lower price-to-book ratios, while the Growth index contains those with higher ratios.
The S&P Midcap 400 Stock Index is an unmanaged index generally representative of the market for the stocks of mid-sized US companies.
The S&P Small Cap 600 Index is an unmanaged index generally representative of the market for the stocks of small capitalization U.S. companies.
The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.
The MSCI EM (Emerging Markets) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the emerging market countries of the Americas, Europe, the Middle East, Africa and Asia.
The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.
The Bloomberg Barclays U.S Aggregate Bond Index is and index of the U.S. investment-grade bond market, including both government and corporate bonds.
The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely help by individuals and institutional investors.
The U.S. Dollar Index is an index of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners’ currencies.