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Monthly Market Memo

Monthly Market Memo

Monthly Market Updates for June 2018

Please find this month’s market updates below. This list is intentionally brief and uses ETFs that are readily available to all investors to represent the major markets. In the second section are five simple portfolio mixes; three of which are described by low-cost Vanguard mutual funds, while the other two are low-cost ETFs. These can be used as a guide against which to compare your portfolio mix. We hope these few, but important data points, are of value to you.

– the AdvicePeriod Team

Major Market Index Returns – Period Ending 6/30/18 (Annualized)

Selections include ETFs generally available to consumers. Returns are net of management fees but do not include trading and Advisory fees. Return source: Morningstar. AP disclosure.

Sample Portfolio Mix Returns (Annualized)

Global portfolio mixes are Stocks/Bonds and are represented by ACWI/AGG** or Vanguard funds where available. Funds are net of all management fees but do not include trading and Advisory fees. Return source: Morningstar. AP disclosure.

Things to Consider: June Monthly Commentary

Markets

The abnormal normal is back. After years of low volatility, we are starting to see more traditional equity volatility in global markets. Several factors, including a potential trade war, may be dampening enthusiasm for international equity markets.

Interest Rates

The 10-year Treasury Note ended just below 3% for the month of June. The Fed is expected to raise rates through the rest of the year beyond the current 2% rate. While savers are benefitting, investors continue to fear rising inflation.

Global Diversification – Fair Weather Fans

With international equity markets struggling in 2018 – specifically emerging markets that are down almost 7% year to date – investors are once again questioning the need to be globally diversified. Investors should be mindful that judging short-term return differences alone may result in missed opportunities offered by global markets. See here.

Over long periods of time, investors benefit more from consistent market exposure, low fees, and low taxes, than just about anything else. There’s simply too much data on this topic to share it all, but here’s one of my favorite blogs from the past that illustrates the point – the variability of returns in different portfolios isn’t that great; which only makes it that much more difficult to add value. The biggest culprit in retarding returns is often fees and taxes. See here.

Forget the sales pitches and remember that investing is easy if you take the emotion out of the equation.

What You Pay For: The Percentage of Active Managers That Underperform Their Benchmarks

Trailing 10 Years Numbers As of December 31, 2017 — S&P SPIVA Scorecard

The SPIVA Scorecard is a robust, widely-referenced research piece conducted and published by S&P DJI that compares actively managed funds against their appropriate benchmarks on a semiannual basis.

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