First Quarter 2015 Capital Markets Update

Last Updated: April 28, 2015

Equity and fixed income markets remained volatile during the first three months of the year as concerns about the Fed raising interest rates, slower economic growth, weaker corporate earnings, and geopolitical unrest weighed on investors’ minds.  As a result, investors were conflicted between the search for higher returns (with higher risk) and the need to preserve capital and minimize losses (with lower returns).  Risk takers, not satisfied with returns from the broader equity and fixed income markets focused on areas that appeared to offer more growth, albeit while taking on more risk.
For domestic equity markets, this resulted in the technology-heavy Nasdaq Composite Index outperforming the broader based S&P 500 as well as the Dow Jones Index.  Investors concerned over the valuation of domestic equities looked to foreign markets for additional opportunities.  As a result, the MSCI EAFE Index (Europe, Australasia and Far East), which represents the equities of companies that derive the majority of their business in foreign developing markets, bested the performance of all 3 U.S. indexes – the Dow Jones, S&P 500 and the Nasdaq.
2015 Q1 Market Returns

Source: Index Returns as of 3/31/2015,
For the first quarter ending March 31, 2015, the Dow Jones Industrial Average finished up slightly at 1.67%.  The broader S&P 500 Index gained 0.95% for the first quarter.  Stocks of higher growth companies as measured by the NASDAQ Composite Index increased 3.48% during the first quarter of 2015.  International stocks of companies in developed countries as measured by the MSCI EAFE (Europe, Australasia, Far-East) Index increased 4.88% for the first quarter.  Emerging market equities remained under pressure from last year with the MSCI EM Index ending with a return of 2.42% for the period. Fixed income markets remained volatile during the first 3 months of the year as the fear of higher interest rates was offset by investors looking for “safe havens” in U.S. fixed income markets, particularly U.S. Treasury securities.  The broad-based Barclays U.S. Aggregate Bond Index returned 1.61% for the first quarter, less than either the riskier high yield index or the more conservative treasury index.  This pointed to the divide between investors who were willing to take on risk and those who wanted to minimize any losses should markets reverse. Riskier bonds, as measured by the ML US High Yield Master II Index, returned 2.54% for the first quarter and only slightly higher than the end of 2014.  The more conservative US 10-year Treasury Bill index posted a return 2.06%% for the first quarter, beating the Barclays US Aggregate as bond investors looked for safe haven investments due to increased geopolitical uncertainty. At Pension Consultants, we focus on investments that have proven track records.  We believe in finding seasoned, proven fund management teams that have positive, consistent, long-term performance instead of individual investments that focus on maximizing return, regardless of risk.  We also focus on having the appropriate mix of stock, bond, and cash investments based on time to retirement, risk tolerance, and return expectations.  By diversifying across asset classes, you have exposure to investments that provide growth, income, and preservation of capital (liquidity) through various economic cycles and minimize your risk. Our Investment Services team can help identify investment funds that are in line with your retirement plan goals, while mitigating the risk. To learn more, please contact a Pension Consultants Investment Consultant at 800-234-9584 or email us at  
PCI’s archived blog entries are dated, the rules and statutes referenced may have changed. The analysis or guidance within these blog entries may have become stale, dated, or no longer accurate. PCI will not update or change these entries to reflect the latest analysis or development.


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