Reflecting on the first quarter of the year, I’m reminded of the mountain expedition investors and markets have undertaken, reaching impressive heights as we began the second quarter of 2024. It’s astounding to consider that just four years ago, the global economy came to a halt in response to the COVID-19 pandemic. This feels like a lifetime ago, and since then, our world has transformed dramatically. We’ve witnessed elections, significant advancements in space exploration, the world population surpassing eight billion, geopolitical upheavals, wars, and groundbreaking developments in artificial intelligence. I suspect many changes have also occurred in your personal lives—new family additions, weddings, retirements, losses, or career changes.

Despite these myriad changes, the markets have continued to reward those who have remained patient and disciplined. Similarly, the U.S. economy has defied all expectations, continuing to show robust growth and resilience. It’s a humbling reminder that while it’s tempting to think we can predict the future, reality often proves otherwise. Our investment philosophy is rooted in humility, encouraging our clients to remain fully invested and reap the rewards of the markets, even during challenging times.

Now, let’s explore the current economic landscape and review how the markets have performed over the last quarter:

Economy

The U.S. economy has continued its gradual glide towards a soft landing as the effects of tightening monetary policy have filtered through the economy and financial system. Inflation has moderated but remains higher than the Fed’s target which has them in a bit of a predicament as interest rates have remained higher for much longer than anyone expected, but the data doesn’t justify rate cuts yet.

The most recent jobs report supported the notion that the economy remains strong, as hiring and wage growth were better than expected. This outcome was considered improbable when the Fed began hiking rates two years ago, a valuable reminder that no one knows for certain what the future holds.

Stocks

On the heels of a strong calendar year in 2023, the stock market kept the party going in the first quarter as global stocks (MSCI All Country World IMI Index) gained 7.7%, with domestic and international markets performing well. U.S. large cap stocks (S&P 500 Index) climbed 10.6% during the quarter, while U.S. small stocks (Russell 2000 Index) rose 5.2%. Meanwhile, international large stocks (MSCI EAFE Index) were up 5.8%, and emerging market stocks (MSCI Emerging Markets Index) lagged other equity asset classes but still gained 2.4% for the quarter.

Bonds

The bond market started the year with mixed performance. U.S. intermediate-term bonds (Bloomberg U.S. Aggregate Bond Index) fell 0.8%, but international bonds (Bloomberg Global Aggregate Ex-US Index) rose 0.6% in the quarter to continue their strong performance from last year, while TIPS (Bloomberg Global Inflation Linked U.S. TIPS Index) was just barely down 0.1%.

Alternatives

Alternatives continued to benefit diversified portfolios. Reinsurance (SwissRe Global Cat Bond Index) posted another good quarter, gaining 4.6% to carry on the strong performance from last year. Trend Following (Credit Suisse Managed Futures Liquid Index) was up to a lesser degree, rising 0.9%. Lending (Cliffwater Direct Lending Index) gained 2.0%, while Event Driven (IQ Hedge Event-Driven Index) was up 1.0%. Real Assets (DJ Brookfield Gbl Infrastructure Index) was the worst performer among alternatives but still gained 0.7% in the first quarter.

I’ve always seen the glass as half full but feel more confident, excited, and optimistic than ever. As we continue our journey, Savant remains focused on the things that matter most to our clients. We are confident that, together, we can navigate whatever the future holds, and we look forward to serving as your wise counsel along the way.


Sources: Morningstar Direct, Federal Reserve, Bureau of Labor Statistics, JP Morgan Asset Management. Indices are unmanaged, do not reflect fees and expenses, and are not available as direct investments. Past performance may not be indicative of future results.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.

Author Brent R. Brodeski Chief Executive Officer / Founder / Financial Advisor

Brent is founder and CEO of Savant. He is a frequent speaker at industry conferences and events and recurrently featured in local, industry, and national media.

About Savant Wealth Management

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Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments and/or investment strategies recommended and/or undertaken by Savant, or any non-investment related services, will be profitable, equal any historical performance levels, be suitable for your portfolio or individual situation, or prove successful. Please see our Important Disclosures.