Market Commentary
The majority of major asset classes and portfolio asset allocations realized positive returns again in the second quarter of 2023. Exuberance is presently high with the pace of inflation decelerating and the hope that the US Federal Reserve will lead a return to an easing of overnight interest rates.
Our position on this matter remains unchanged from last quarter where we wrote that the hope for aggressive rate cuts was overly optimistic and likely to disappoint. As fiduciaries of your capital we cannot ignore the risks embedded within current equity market valuations and thus will continue to operate cautiously and carefully.
We continue to maintain the same consistent discipline around our portfolio construction process and market positioning. We view the credit side of the capital structure as being more attractive priced than equities and would rather be a lender to certain asset classes than an equity investor. Our focus remains on protecting capital, avoiding excessive drawdowns and allocating capital at the margin to stable investment strategies. This providing healthy combinations of lower volatility, income, diversification, inflation protection and overall risk mitigation.
Year-to date performance and risk of Multi-Asset Reference Portfolios, for comparison, have been updated as follows:
Portfolio | Description | Q2 Return | YTD Return | Risk (3Y Standard Deviation) |
Moderate | 50% Bonds, 50% Equities | 1.7% | 6.2% | 8.8% |
Balanced | 40% Bonds, 60% Equities | 2.2% | 7.3% | 9.6% |
Growth | 30% Bonds, 70% Equities | 2.8% | 8.3% | 10.4% |
If you are looking to compare the performance of your portfolio to its proper Reference Portfolio, most clients will fit into either the Moderate or the Balanced category.
We would like to thank you for the continued support and trust you have placed upon us as stewards and fiduciaries of your long-term investment capital.
