Quarterly Recap - 3rd Quarter 2014

Market Indices1September 20143Q2014Year-to-Date
S&P 500-1.40%+1.13%+8.34%
Russell 3000-2.08%+0.01%+6.95%
MSCI EAFE-3.84%-5.88%-1.38%
MSCI Emerging Markets-7.41%-3.49%+2.43%
Barclays US Aggregate Bond-0.68%+0.17%+4.10%
Barclays Municipal+0.10%+1.49%+7.58%
Barclays US Corporate High Yield-2.09%-1.87%+3.49%

  • S&P 500 fell in September, but extended gains for a seventh straight quarter.
  • The CBOE's VIX Volatility Index surged 41% during the quarter, the most in three years.
  • Demand for U.S. Treasuries remains robust as global investors seek higher relative yields.
U.S. equity markets retreated in September as investors faced rising volatility amid increased geopolitical risks and prospects for higher rates next year after the Federal Reserve ends its bond-buying program later this month. Increased casualties in Ukraine, heightened economic sanctions against Russia, unparalleled brutality by the ISIS terrorist army and more recently, the unfolding pro-democracy protests in Hong Kong, together served to depress global investor sentiment during the month and, somewhat, the quarter. On a positive note, U.S. 2Q GDP growth was upwardly revised to 4.6% from 4.2% and a continuing trend of low inflation may provide cover for the Fed to keep short-term interest rates near zero longer into 2015. The S&P 500 gained 0.6% during the third quarter (up 1.1% including dividends) for its seventh straight quarterly gain, the longest string of gains since the 14-quarter bullish run that ended in 1998. The S&P 500 ended the month 39 points below its 2,011 all-time high set on September 18th.

Small-cap U.S. companies widely underperformed large-cap stocks during September, the quarter and year-to-date. The Russell 2000 Index, a broad measure of small-cap equity performance, contracted 6.1% last month, lost 7.4% during the third quarter and is down 4.4% YTD. The index is down 8.8% from its July 3rd record high. The Russell Mid Cap Index lost 3.3% in September, trimming its YTD gain to 6.9%.

Value underperformed growth last month and during the quarter. The Russell 1000 Value Index fell 2.1% in September whereas the Russell 1000 Growth Index lost 1.5%. For the quarter, the Russell 1000 Growth rose 1.5%, while its value counterpart lost 0.2%. YTD however, the Russell 1000 Value slightly edged out the Russell 1000 Growth, 8.1% versus 7.9%.

Seven of the ten major sectors rallied in the 3Q with Healthcare (+5.5%), Technology (+4.8%) and Telecom (+3.1%) up the most. Healthcare (+16.6%) and Technology (+14.1%) are also this year's top performers. In commodities, crude oil sank 13% last quarter, its largest decline in two years.

Developed markets outside the U.S. and Canada, as measured by the MSCI EAFE Index, widely underperformed the U.S. during the month (-3.8%) and quarter (-5.9%). Emerging markets, as measured by the MSCI Emerging Markets Index, slumped 7.4% last month, trimming 2014 YTD gains to 2.4%. Turkey, Russia and Taiwan led quarterly declines in emerging markets.

The Barclays U.S. Government Bond Index fell 0.5% last month, cutting its quarterly gain to 0.3% and YTD gain to 3%. Benchmark 10-year Treasury yields rose by nearly 15 basis points during September to 2.49% after falling 18 basis points in August. At the other end of the credit quality spectrum, below-investment grade corporate bonds lost 2.1% last month, trimming its YTD gain to 3.5%, as measured by the Barclays U.S. Corporate High Yield Index. Higher quality investment grade bonds, as measured by the Barclays U.S. Aggregate Bond Index, fell 0.7% in September, trimming its quarterly return to 0.2%. The Barclays Municipal Index repeated a 0.1% gain for a second month, extending its YTD return to 7.6%.

 

1. Morningstar Direct (all performance percentages are total return based, which include reinvested dividend, interest)

This information is compiled by Cetera Investment Management.

About Cetera Investment Management
Cetera Investment Management LLC provides passive and actively managed portfolios across five traditional risk tolerance profiles to the clients of financial advisors, who are affiliated with its family of broker-dealers and registered investment advisers. Cetera Investment Management is part of Cetera Financial Group, Inc., which includes Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Financial Specialists LLC, and Cetera Investment Services LLC.

About Cetera Financial Group
Cetera Financial Group, Inc. is the cornerstone of the retail advice division of RCS Capital Corporation (RCS Capital) (NYSE: RCAP), which is focused on serving the needs of investors with best-in-class solutions.

Committed to using its collective knowledge and expertise in service to and for others, Cetera Financial Group is focused on the growth of its affiliated broker-dealers and financial professionals' businesses by giving them the industry and market insight, technology, resources and solutions they need to better focus on helping their clients pursue their financial goals. For more information, visit cetera.com.

No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.

All economic and performance information is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

Affiliates and subsidiaries and/or officers and employees of Cetera Financial Group or Cetera firms may from time to time acquire, hold or sell a position in the securities mentioned herein.

 

Solon Financial Group
6200 SOM Center Rd. B21 Solon, OH 44139
Phone: (440) 519-1838, (866) 517-7302 Fax: (440) 519-1878

Securities and advisory services offered through Cetera Advisors LLC, member FINRA, SIPC. Cetera is under separate ownership from any other named entity.

6200 SOM Center Rd, B21, Solon, OH 44139

Securities and advisory services offered through Registered Representatives of Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency LLC), member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor.  Cetera is under separate ownership from any other named entity.

Individuals affiliated with this broker/dealer firm are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.

This site is published for residents of the United States only. Registered Representatives of Cetera Advisors LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information please contact the advisor(s) listed on the site, visit the Cetera Advisors LLC site at www.ceteraadvisors.com

 

The registered representative(s) and/or investment adviser representative(s) listed on this website are licensed and registered in the following states:

We are licensed to sell Insurance Products in OH,PA.

[ Online Privacy Policy | Important Disclosures | Business Continuity | Privacy Promise | Order Routing Disclosure | Cetera Advisors ]