Market Report | Q3 Time and Tide Wait for No Man
Asset class valuations continued to rise in Q3, with broad global participation fueled by accommodative monetary policy and favorable sentiment. Even with elevated equity valuations, markets have continued to shrug off legislative bottlenecks and geopolitical risk.
The broad U.S. equity market posted positive returns for the quarter but underperformed both developed and emerging international markets. In the U.S. and emerging markets, value underperformed growth – but, the value factor premium was positive in developed international markets. Small-cap stocks outperformed large caps in the U.S. and in developed international markets but underperformed large caps in emerging markets. Developed and emerging international currency performance was mixed but outperformed the U.S. dollar in aggregate. Interest rates in the U.S. increased slightly.
If you’ve ever heard that blindfolded monkeys throwing darts at pages of stock listings can do as well as most professional stock pickers, the article included in the review sheds some light on this notion and explains how a random selection of stocks can tilt a portfolio toward factors that historically provide higher rates of return. We spend a lot of time examining factor premiums and how best to efficiently incorporate them into client portfolios. If you’re interested in more details about the factors we target, we have published several recent articles on that subject here: http://www.talisadvisors.com/blog.
Please contact your advisor with any questions about the material. As always, we value our clients and we are continually working to better serve your interests. Click here to read the full Q3 Market Review.