Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morngan as of 03/01/19. Rates and Economic Calendar Data from Bloomberg as of 03/05/19. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
Global equity markets finished the week slightly higher, presumably on the back of promising developments related to U.S./China trade discussions. In the U.S., the S&P 500 Index pushed moderately higher finishing the week at a level of 2,804, representing a weekly gain of 0.46%, while the Russell Midcap Index gained 0.80% for the week. On the international equities front, developed markets returned 0.58%, while emerging markets lost 0.65%. Finally, the 10-year U.S. Treasury yield finished the week at 2.76%.
As of the end of February, the 2019 year-to-date return on the S&P 500 Index stands at 12.26%. In other words, the S&P 500 Index has propelled over 12% higher in just two months. This meteoric rise has naturally motivated some investors to question whether it’s time to take more of a “risk-off” stance by locking-in some profits and reducing overall equity exposure. Such a stance gains even more credence when considering that most market prognosticators forecast that the S&P 500 Index will end the year near a level reached after only two months.
However, before making any sudden decisions, investors should take into consideration their own specific goals that are a part of their longer term financial plans and they would be wise to also examine historical stock market behavior. Surprisingly, history argues for potential continued, if not increased, stock exposure in this environment. In fact, according to Goldman Sachs Asset Management, the S&P 500 Index has historically produced a positive return 95% of the time in the 12 months following a monthly gain of 7%. Moreover, the average 12-month return following a strong starting month, like we saw in January this year, has been 21%.
Although the historical record might seem to be on the side of U.S. stocks, it’s undeniable that a plethora of unexpected geopolitical and/or economic factors could quickly create sharp levels of market volatility and past performance, of course, is not an indication of future results. As a result, we encourage investors to revisit the diversification that may, or may not, be in place within their existing portfolios.
Important Information and Disclaimers
Disclosures: Hennion & Walsh is the sponsor of SmartTrust® Unit Investment Trusts (UITs). For more information on SmartTrust® UITs, please visit www.smarttrustuit.com. The overview above is for informational purposes and is not an offer to sell or a solicitation of an offer to buy any SmartTrust® UITs. Investors should consider the Trust’s investment objective, risks, charges and expenses carefully before investing. The prospectus contains this and other information relevant to an investment in the Trust and investors should read the prospectus carefully before they invest.
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.
There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions. Distributions from REIT investments are taxed at the owner’s tax bracket.
The prices of small company and mid cap stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.
Investing in commodities is not suitable for all investors. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity.
Products that invest in commodities may employ more complex strategies which may expose investors to additional risks.
Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than original cost upon redemption or maturity. Bond Prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment.
MSCI- EAFE: The Morgan Stanley Capital International Europe, Australasia and Far East Index, a free float-adjusted market capitalization index that is designed to measure developed-market equity performance, excluding the United States and Canada.
MSCI-Emerging Markets: The Morgan Stanley Capital International Emerging Market Index, is a free float-adjusted market capitalization index that is designed to measure the performance of global emerging markets of about 25 emerging economies.
Russell 3000: The Russell 3000 measures the performance of the 3000 largest US companies based on total market capitalization and represents about 98% of the investible US Equity market.
ML BOFA US Corp Mstr [Merill Lynch US Corporate Master]: The Merrill Lynch Corporate Master Market Index is a statistical composite tracking the performance of the entire US corporate bond market over time.
ML Muni Master [Merill Lynch US Corporate Master]: The Merrill Lynch Municipal Bond Master Index is a broad measure of the municipal fixed income market.
Investors cannot directly purchase any index.
LIBOR, London Interbank Offered Rate, is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London.
The Dow Jones Industrial Average is an unweighted index of 30 “blue-chip” industrial U.S. stocks.
The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market, and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
DJ Equity REIT Index represents all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as Equity REITs according to the S&P Dow Jones Indices REIT Industry Classification Hierarchy. These companies are REITs that primarily own and operate income-producing real estate.