Investment Review
Spring 2021
A quick glance at the returns chart below confirms your reward for staying invested in stocks over the past 12 months. This is especially true for recently out-of-favor small cap stocks—they returned over 95%! This article discusses specific asset class returns for the prior quarter and 12 months ending March 31, 2021.
Selected Headlines from the Past 12 Months Graphed with the World Stock Market Performance (MSCI All Country World Index)
The chart above highlights some of the year’s prominent headlines in the context of global stock market performance as measured by the MSCI All Country World Index-Investable Market Index (MSCI ACWI IMI). 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 2021 | 12 Months Ending 3/31/2021 |
| U.S. Large Cap Vanguard 500 Index Fund |
+6.18% | +56.33% |
| U.S. Large Cap Value iShares Russell 1000 Value Index |
+11.29% | +56.02% |
| U.S. Small Cap iShares Russell 2000 Index |
+12.90% | +95.39% |
| U.S. Small Cap Value iShares Russell 2000 Value Index |
+21.34% | +97.94% |
| International Vanguard Total International Stock Index Fund |
+3.94% | +52.80% |
| Emerging Markets Vanguard FTSE Emerging Markets ETF |
+4.01% | +58.50% |
| U.S. REITs Vanguard REIT ETF |
+8.79% | +36.73% |
| Investment-Grade Bonds iShares Core Total U.S. Bond Market ETF |
-3.37% | +0.73% |
Source: SchwabInstitutional.com
Individual Asset Classes
The returns for the recent quarter that are listed below are sourced from my.Dimensional.com.
World Asset Classes
Equity markets around the globe posted positive returns in the first quarter. Looking at broad market indices, US and non-US developed markets outperformed emerging markets.
Value outperformed growth across regions. Small caps outperformed large caps across regions as well.
REIT indices outperformed equity market indices in the US and underperformed in non-US developed markets.
U.S. Stocks
The US equity market posted positive returns for the quarter and outperformed non-US developed markets and emerging markets.
Value outperformed growth across large and small cap stocks.
Small caps outperformed large caps.
REIT indices outperformed equity market indices.
International Developed Market Stocks
Developed markets outside the US posted positive returns for the quarter, underperforming US equities but outperforming emerging markets.
Value outperformed growth.
Small caps outperformed large caps.
Emerging Markets Stocks
Emerging markets posted positive returns for the quarter, underperforming the US and developed ex US equity markets.
Value outperformed growth.
Small caps outperformed large caps.
Real Estate Investment Trusts
US real estate investment trusts outperformed non-US REITs during the quarter.
Fixed Income
Interest rates generally increased in the US Treasury fixed income market during the first quarter. The yield on the 5-Year US Treasury note rose 56 basis points (bps), ending at 0.95%. The yield on the 10-Year T-note increased 81 bps to 1.74%. The 30-Year Treasury bond yield increased 75 bps to 2.39%.
On the short end of the curve, the 1-Month US Treasury bill yield decreased 3 bps to 0.05%, and the 1-Year T-bill yield fell 5 bps to 0.08%. The yield on the 2-Year US Treasury note climbed 6 bps to end at 0.15%.
In terms of total returns, short-term corporate bonds declined 0.59%. Intermediate-term corporate bonds returned 2.19%.
The total return for short-term municipal bonds was flat, while intermediate-term municipal bonds lost 0.52%. Revenue bonds outperformed general obligation bonds.
Conclusion
We continue to recommend an asset allocation for our clients based upon personal risk tolerance and long-term objectives. A mix with a larger allocation to stock is considered riskier, but has a higher expected return over time.
Thank you for your continued confidence and trust.
