Investment Review
Spring 2017
Most asset classes returned attractive performance in the first quarter of 2017. Emerging market stocks were the winner, ticking up 11.4%. International developed returned 6.8%, U.S. stocks returned 5.7%, and bonds were up just 0.8%. Details of select asset class performance are below.
Selected Headlines from the Past 12 Months Graphed with the World Stock Market Performance (MSCI All Country World Index)
We are not offering these headlines to explain market returns. But they do serve as a reminder that investors should view daily events from a long-term perspective and avoid making financial decisions based solely on the news.
Investment Review
| Benchmark Funds | Q1 2017 | 12 Months Ending 3/31/2017 |
| U.S. Large Cap Vanguard 500 Index Fund |
+6.0% | +17.0% |
| U.S. Large Cap Value iShares Russell 1000 Value Index |
+3.1% | +19.0% |
| U.S. Small Cap iShares Russell 2000 Index |
+2.2% | +26.2% |
| U.S. Small Cap Value iShares Russell 2000 Value Index |
-0.3% | +29.3% |
| International Vanguard Total International Stock Index Fund |
+8.4% | +13.7% |
| Emerging Markets Vanguard FTSE Emerging Markets ETF |
+11.2% | +17.8% |
| U.S. REITs Vanguard REIT ETF |
+0.8% | +3.0% |
| Investment-Grade Bonds iShares Core Total U.S. Bond Market ETF |
+0.8% | +0.2% |
Individual Asset Classes
World Asset Classes
Looking at broad market indices, emerging markets outperformed both U.S. and non-U.S. developed markets during the quarter. Real estate investment trusts (REITs) lagged their equity market counterparts.
The value effect was negative in the U.S., non-U.S., and emerging markets. Small caps outperformed large caps in emerging markets and non-U.S. developed markets but underperformed in the U.S.
U.S. Stocks
The broad U.S. equity market recorded positive absolute performance for the quarter.
Value underperformed growth indices across all size ranges.
Small caps underperformed large caps.
International Developed Market Stocks
In U.S. dollar terms, international developed markets outperformed the U.S. equity market but underperformed emerging markets indices during the quarter. Small caps outperformed large caps in non-U.S. developed markets.
The value effect was negative across all size ranges in non-U.S. developed markets.
Emerging Markets Stocks
In U.S. dollar terms, emerging markets indices outperformed both the U.S. and developed markets outside the U.S. Small caps outperformed large caps.
The value effect was negative among large cap stocks in emerging markets but positive among small cap stocks.
Real Estate Investment Trusts
Real estate investment trusts (REITs) lagged their equity market counterparts.
Fixed Income
Interest rates were mixed across the U.S. fixed income market during the first quarter of 2017. The yield on the 5-year Treasury note was unchanged, ending at 1.93%. The yield on the 10-year Treasury note decreased 5 basis points (bps) to 2.40%. The 30-year Treasury bond yield decreased 4 bps to 3.02%.
The yield on the 1-year Treasury bill rose 18 bps to 1.03%, and the 2-year T-note yield increased 7 bps to 1.27%. The yield on the 3-month T-bill increased 25 bps to 0.76%, while the 6-month T-bill yield rose 29 bps to 0.91%.
Looking at total returns, short-term corporate bonds gained 0.69% and intermediate-term corporate bonds gained 1.16%.
Short-term municipal bonds generated a total return of 1.20%, while intermediate-term municipal bonds returned 1.91%. Revenue bonds performed in line with general obligation bonds.
