Sources: Equity Market and Fixed Income returns are from JP Morgan as of 4/20/17. REIT, Rates and Economic Calendar Data from Bloomberg as of 4/24/17.
Stocks rallied last week following news that the Trump administration would release details of their tax reform package and reports of stronger than expected earnings growth. The S&P 500 Index gained 0.9% while the Russell Midcap Index posted a 1.5% advanced. Small cap stocks, as measured by the Russell 2000 Index, outperformed last week, moving 2.6% higher. In terms of style performance, Growth stocks outperformed Value stocks last week and continue to lead thus far in 2017. For example, the Russell 1000 Growth Index is up 9.2% this year while the Russell 1000 Value index is only up 2.1%. This type of divergence in style performance makes portfolio exposure to these two groups an important consideration. On the international front, both developed and emerging markets advanced 0.2% last week and continue to outpace domestic stocks this year.
Additionally on the political front, France held the first round of their presidential election this past weekend and the results appear to have appeased investors. With centrist candidate Emmanuel Marcon and populist candidate Marine Le Pen advancing to next weekend’s final bout, hopes appear to be high that Marcon will win and that the status quo will remain for the most part. If the past twelve months have taught us anything, however, it is not to discount a potential, surprise populist result. With most European stock markets up double digits thus far in 2017, these markets may be particularly vulnerable to a pullback should there be a surprise result next Sunday. We believe, however, that short of a Le Pen victory, the global economic recovery and the relatively lower valuations of developed European stock markets make the area particularly attractive at this time.
Whether deciding to overweight growth versus value stocks, or domestic versus international markets, striking the right balance can play a major role in your success as an investor. To this end, we encourage investors to try to define the rate of return they need, and the amount of risk they are comfortable with taking, in order to achieve a longer term financial goal, such as retirement, before deciding on how and where to invest. Conducting this type of exercise allows one to focus less on the month-to-month or year-to-year results of their strategy and more on having the discipline needed to withstand intermittent bouts of volatility or underperformance relative to arbitrary measures such as the Dow Jones Industrial Average.
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 REITSs that primarily own and operate income-producing real estate.