Markets

Global equity markets continued to set all-time highs throughout the quarter, illustrating the importance of staying the course after a volatile first half of the year. Bonds also had a solid quarter, leading to strong overall portfolio performance. We anticipate slowing but positive growth, with lower rates leading to better performance in mid and small-cap equities.

As a reminder, the index returns above should only be used as a very broad point of reference.

Cash & Fixed Income: Tax-free bonds led for the quarter, while high-yield bonds led for all other periods. Tax-free bonds still lag for the 1 and 3-year periods, while aggregate bonds were the worst performer in the 5 and 10-year periods. Cash was the worst performer for the quarter and 15 years.

In August, we added to bonds and alternatives from large-cap profits. With equity valuations continuing to climb and the anticipation of more rate cuts from the Federal Reserve, this was a good opportunity to rebalance portfolios and reduce overall risk. We believe bonds are set to perform well in this environment and expect to see price appreciation and consistent income.

Equities: Small-cap stocks led for the quarter, while large-cap stocks led for all other periods. Foreign stocks lagged in the quarter, 5, 10, and 15 years, while small-cap stock was the worst performer over the 1 and 3-year periods.

In August, in addition to adding to fixed income and alternatives, the large-cap profits were used to add to mid-cap, and foreign, which will do well as the Fed began cutting rates again. We also swapped our small-cap value fund for a new exchange-traded fund, which we feel is better positioned for the environment ahead.

In today’s economic climate, we continue to focus on holding a diversified portfolio of equities, fixed income, and alternatives that is aligned with your long-term risk tolerance. We intend to keep portfolios largely in line with long-term model allocations and not take large, speculative bets in any one asset class, sector, or geographic region. Our current positioning is tilted towards higher quality across all asset classes, invested in companies that generate consistent cash flows regardless of the economic cycle. Times of uncertainty call for discipline, and we are taking a disciplined approach to the overall portfolio allocation.

This Commentary is provided by Spraker West Wealth Management, a registered investment advisor, and is for informational purposes only. It should not be construed as investment advice and is not intended as a solicitation of any specific product or service. Investments and/or investment strategies include risk including the possible loss of principal. There is no assurance that any investment strategy will achieve its objectives. Information provided is not intended as tax or legal advice and should not be relied upon as such. You are encouraged to seek tax or legal advice from a qualified professional.