Q2 Market Update - AssetMark

Second Quarter 2019

Market Review Q2 2019

Zoë Brunson, CFA

Senior Vice President, Investment Strategies

AssetMark, Inc.

Equities finished the quarter in strong fashion with returns for each of the major markets above 6% in June, lifting year-to-date returns into double digits. Bonds also saw solid returns in the quarter with each of the major markets seeing a return above 3%, lifting year-to-date returns above 5%.
Within equities, US provided the strongest returns for the quarter and year-to-date at 4.3% and 18.5% respectively. International developed was generally on par with the US markets for the quarter, helped by a weaker dollar, but trailed by 4% year-to-date. Emerging market equities saw the weakest relative returns, and China saw negative returns in the quarter as trade tensions rose.
By sector, technology and consumer discretionary were the top two sectors year-to-date lifting the returns of the growth indices. Mid-cap growth saw a return of 26.1% for the first half of the year leading the style pack while small-cap value trailed with a return of 13.5%.
The bond sectors saw some impressive returns with credit and long treasuries reaching double digits for the year-to-date period. Both investment-grade and high-yield bonds returned 10% for the year-to-date period while long-term treasuries saw the strongest returns within fixed income at 11%.
Across asset classes, US REITs saw the strongest year-to-date returns, just shy of 20%, but saw weaker relative returns in the quarter, 1.8%, a slight surprise given the drop in interest rates.
Gold saw a big bounce in returns for the quarter, providing the strongest asset class return for the quarter at 9%, lifting it to a 10% return for the year-to-date period. A dovish Fed and global uncertainty lifted returns.

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Asset Class	Index
International Bonds	Bloomberg Barclays Global Aggregate ex USD - is a flagship hard currency Emerging Markets debt benchmark that includes fixed and floating-rate US dollar-denominated debt issued from sovereign, quasi-sovereign, and corporate EM issuers. Country eligibility and classification as Emerging Markets is rules-based and reviewed annually using World Bank income group and International Monetary Fund (IMF) country classification.
High-Yield Bonds	Bloomberg Barclays US Corporate High Yield - measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt.
Investment-Grade Bonds	Bloomberg Barclays US Corporate Investment Grade - is a broad-based benchmark that measures the investment grade, fixed-rate, taxable, corporate bond market. It includes USD-denominated securities publicly issued by US and non-US industrial, utility, and financial issuers that meet specified maturity, liquidity, and quality requirements.
Long-term Treasuries	Bloomberg Barclays US Treasury Long - measures the performance of long term government bonds issued by the US Treasury. It includes all publicly issued, US Treasury securities that have a remaining maturity of 10 or more years, are non-convertible, are denominated in US dollars, are rated investment grade, are fixed rate, and have $250 million or more of outstanding face value.
Global Equities	MSCI ACWI – is a free float-adjusted capitalization weighted index that is designed to measure the equity performance of countries considered to represent both developed and emerging markets.
International Equities	MSCI EAFE – is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of countries considered to represent developed markets, excluding the U.S. and Canada.
Emerging Markets Equities	MSCI Emerging Markets – is a free float-adjusted, market capitalization index that is designed to measure the equity market performance of countries considered to represent emerging markets.
US Equities	S&P 500 – is an unmanaged index that is generally considered representative of the US equity market, consisting of 500 leading companies in leading industries of the US economy (typically large cap companies) representing approximately 75% of the investable US equity market.
Mid-Cap Growth	Russell Mid Cap Growth - measures the performance of the mid-cap growth segment of the US equity universe. It includes those Russell Mid Cap Index companies with higher price-to-value ratios and higher forecasted growth values.
Small-Cap Value	Russell 2000 Value - measures the performance of the small-cap value segment of the US equity universe. It includes those Russell 2000 Index companies with lower price-to-book ratios and lower expected growth values.
Gold	Bloomberg Sub Gold - is a commodity group sub-index of the Bloomberg Commodity Index composed of futures contracts on Gold. It reflects the return of underlying commodity futures price movements only and is quoted in USD.
Commodities	Bloomberg Commodities - is a broadly diversified benchmark that measures the futures contracts of physical commodities traded on US exchanges, with the exception of aluminum, nickel and zinc, which trade on the London Metal Exchange (LME). The component weightings are also determined by several rules designed to insure diversified commodity exposure.
REITS	FTSE NAREIT All Equity REITs – measures the performance of publicly traded US real estate securities, such as Real Estate Investment Trusts (REITs) and Real Estate Operating Companies.
Global 60/40 Blend	60% MSCI ACWI / 40% Bloomberg Barclays Global Aggregate – is a blend of global equities and global bonds indexes used as a benchmark for a balanced portfolio.

C19-0070 | 7/2019 | EXP 07/31/2020
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