Quarterly Investment Update
January 28, 2016
Looking back at 2015, U.S. small, mid, and large cap growth stocks outperformed their value counterparts by a noticeable margin. International and emerging markets lagged behind the U.S. markets. In the bond market, municipal bonds were the best performing segment, ending the year up 3.30%, according to Morningstar Barclays Municipal TR USD Index.
At the beginning of 2015, we took the unconventional approach of adding municipal bonds to our retirement accounts. We believed they would provide needed diversification and potentially offer a more attractive pre-tax return as opposed to taxable and government bonds. We now believe it is time to capture our gains and move back to the more conventional approach of investing only in taxable bonds within our retirement accounts.
We are continuing to monitor the positions that make up our current model allocations, and we have seen fit to make targeted changes during the first quarter of 2016.
As always, it is our intention for clients to have a well-diversified portfolio of best in class asset managers across the broad stock and bond markets. In addition, we rebalance portfolios on a periodic basis in seeking to take advantage of any shifts in the markets over time.
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.
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.
Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply. If sold prior to maturity, capital gains tax could apply.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.
The Barclays Municipal Bond Index is a market value weighted index of investment grade municipal bonds with maturities of one year or more.