One Year Ago, Would Anyone Have Predicted This?

March 24, 2021 | Jessica Noviskis, CFA, Associate Director of Alternatives

Column chart showing returns for various asset classes a year on from the market bottom in March 2020. Chart subtitle: Markets have bounced sharply off the March 23rd, 2020 bottom. Chart description: Y-axis shows Return, ranging from -60% to +140%. X-axis shows Russell 1000, Russell Mid, Russell 2000, MSCI EAFE, MSCI EAFE SC, MSCI EM, U.S. Aggregate, High Yield, Bank Loan, EMD. Each category has a column for return period 12/31/19 through 3/23/20 and a column for return period 3/23/20-3/23/21. Excluding Agg, all categories were negative for first period by at least 30% and all are positive by about 20%+. Chart source: Bloomberg.

What a year it has been. Officially one year after the equity market’s bottom on March 23rd, 2020, all major indices in the chart above have at least recovered back to ending 2019 levels. The groups that were hit the hardest have also rebounded the strongest, with returns over the last year exceeding 100% for some. Small-cap equities stand out, especially in the U.S. — up 121% over the last year and up 33% over the almost 15-month period since 2019. U.S. mid-cap equities are up 101% over the last year, up 25% over the full period, and U.S. large-cap equities are up 83% over the last year for a 26% return over the full period. Small-cap stocks have also outperformed internationally — the MSCI EAFE Small Cap Index is up 91% over the last year and 18% since 2019, while the MSCI EAFE Index is up 67% over the last year and 12% for the full period. Emerging markets, some of the hardest hit by the crisis last year, have more than recovered, up 78% over the last year for a 22% return since 2019. Fixed income returns have been more muted. Investment grade bonds stayed positive in early 2020 as equity markets fell precipitously and are up another 3% since. High yield bonds, bank loans, and emerging market debt were hit harder but still held up better than equities. Each group has recovered those losses but remains in positive single-digit territory over the full period.

From here, we expect returns will likely moderate. As the vaccine roll-out continues we expect further economic re-openings and renewed growth across the globe, but it seems highly unlikely capital markets returns can continue at this pace beyond the initial recovery.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Jessica Noviskis, CFA
Associate Director of Alternatives

Get to Know Jessica

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

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