Dear Friends and Clients:

 

October 2014

 

QUARTERLY AND YEAR-TO-DATE RETURNS

 

If you have been paying attention to the financial press recently, you are probably aware of the strong S&P 500 returns through September 30, 2014. This index, consisting of the 500 largest companies in the US, has returned 8.35% on a year to date basis and 19.74% in the prior 12 months.  While our Large Cap US equity positions have experienced similar returns, keep in mind that our portfolios are diversified with approximately 12,000 individual stocks in about 50 countries. Additionally, the vast majority of our portfolios also include a sizable bond allocation in an effort to reduce the volatility of your investments. While this diversification maximizes returns while reducing risk over the long term, there will be short term periods of time when certain asset classes outperform a diversified portfolio.

 

A better benchmark for comparison of equity returns may be the MSCI All Country World Index Net which we are now including in the quarterly report. While this index has slightly different weightings around the world than our portfolios, we feel it offers a better basis of comparison than the S&P 500 index.

 

In the chart below, you will note that most asset classes were negative for the quarter, particularly the Small Cap and International Core funds. The chart below compares the Global Neutral Porfolios to the individual fund returns; your portfolio may vary from this.  

 

Equities in the sample portfolio returned 2.25% on a year to date basis before advisor and custodian fees.  The MSCI All Country World Index Net year-to-date return is 3.73%, with 1-3 Year Treasury yielding 0.44%. If one did a simple weighted average you would come up with about a 1.84% return before fees.

  

The chart below summarizes returns through September 30, 2014.

 

Quarter to Date

Year to Date

12 Prior Months

Net Return

Net Return

Net Return

Equities

-4.61%

2.25%

9.48%

Fixed Income

-0.57%

1.22%

0.62%

DFA FUNDS

 

 

 

US Core Equity

-1.95%

4.44%

15.61%

US Large Cap

1.13%

8.25%

19.64%

US Small Cap Value

-7.23%

-3.03%

8.34%

US Small Cap

-7.18%

-5.82%

4.80%

US Real Estate

-3.28%

14.28%

13.10%

International Large Cap

-6.07%

-1.01%

4.65%

International Core

-7.22%

-1.62%

4.41%

International Small Cap Value

-8.53%

-1.06%

6.67%

International Real Estate

-5.08%

7.97%

7.31%

EM Core

-3.21%

3.95%

5.70%

Short Term Fixed

0.07%

0.28%

0.29%

Core Bonds

-0.08%

0.76%

0.73%

Global Bonds

0.00%

0.25%

0.41%

Treasury Inflation Protected

-2.27%

3.57%

1.03%

Cash & Equivalents

n/a

n/a

n/a

Total

-2.64%

2.28%

13.94%

Barclays US Treasury 1 - 3Y

0.03%

0.44%

0.50%

MSCI All Country World Index Net

-2.30%

3.73%

11.32%

MSCI EAFE Net

-5.88%

-1.38%

4.25%

Russell 2000

-7.36%

-4.40%

3.93%

S&P 500 Composite

1.13%

8.35%

19.74%

 

 

 

 

Source: Dimensional Fund Advisors

 

 

 


 

 

As always, we welcome any questions or comments.  We're here to help.

 

Thanks for taking a look!

  

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Brian Puckett, CFP & Dennis Packard, CFP
Align Wealth Management
Oklahoma City, OK
Tampa Bay, FL
(800) 401-6477
[email protected]
http://www.alignmywealth.com