Weekly Market RecapFor the first three months of 2015, returns were generally positive across markets and asset classes. The average FutureAdvisor portfolio rose +1.16%. January and March saw generally weaker returns with most asset classes falling in value, but February was strongly positive leading to overall positive returns for the start of the year. Our performance lagged the initial estimate of other wealth managers' performance by 0.71% for the quarter, doing better in weaker markets of January and March, but lagging February's strong growth. After FutureAdvisor's 2014 outperformance of ARC's Steady Growth Private Client Index by 7.52% we remain significantly ahead of other wealth management peers on a rolling 12 month view. The US market as measured by the S&P 500 was generally weaker than most markets and rose 0.95%. FutureAdvisor's allocation to real estate helped performance in US and developed markets, with real estate funds up between 3% and 6% depending on the fund. Small cap funds generally performed positively, while value funds lagged the broader US market. These portfolio tilts combined with FutureAdvisor's international and asset class diversification lead to an outcome ahead of the S&P 500. The first quarter was one in which international diversification was valuable for the US investor. Global markets as measured by the MSCI index rose 2.31%, developed markets outside the US started 2015 strongly, rising 4.88%. This result was helped notably by Japan, up 10.21%, where it appears the economic policies of Prime Minister Shinzo Abe may be bearing fruit, and in Europe, where the markets took an optimistic view of monetary stimulus, and we saw some early, if muted, signs of general European growth. As a reminder, Europe is 2% below the level of economic activity (GDP) it had before the 2008 recession, whereas in contrast the US is 9% ahead. Emerging markets were overall positive up 2.42% and Russia, China and India all rose over 5%, but this was somewhat offset by extreme weakness in Brazil, down 14.68% as the country appears close to recession impacted by rising interest rates and weak commodity prices. However, the power of diversification within emerging markets was evident as strong performances from most other countries more than offset this weakness leading to overall emerging market growth. Fixed income returns were generally positive domestically, though internationally fixed income returns fell. Overall, 2015 has started in a positive, but relatively volatile, fashion for investors and international and asset class diversification helped returns in the first quarter. Note that this analysis excludes any potential tax efficiency gains for clients based on tax efficient allocation, our long-term capital gains oriented strategy, and tax loss harvesting activities. Disclaimer: Your Portfolio Summary
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Saturday, April 18, 2015
Your Weekly Update - Q1 Markets Review
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