May 5, 2015
First Quarter 2015: Investment Perspective
Financial assets performed well in the first quarter. Global equities and bonds both rose modestly. The European Central Bank started its asset purchase program in the quarter, and European sovereigns have traded to never-before-seen lows in yield. That desperation for yield is seeping over into markets for U.S. rates and foreign exchange. Recent data points suggest that global growth is becoming more balanced, with the United States decelerating slightly and the euro zone showing signs of vigor.
Markets have reflected the change, as non-U.S. markets outperformed the United States. That said, markets continue to be punctuated by significant geo-political and macro/monetary events. The crisis in Ukraine, Greece’s fiscal impasse, and proxy conflicts in Syria/Yemen/Iraq remain unresolved. Each of these risk upsetting the existing order with unpredictable consequences for global policy and economies. As a result, short-term financial asset prices are reacting forcefully to instantaneous developments. Algorithmic trading appears to be exacerbating these swings, heightening volatility. But, as history has demonstrated, these types of events have little impact on the longer term value of financial assets. That is driven primarily by valuation, which is where we focus our efforts in allocating client assets.
On a quarterly basis, Hirtle Callaghan publishes our perspective on the current market. We have included the first page of that piece below. If you would like to receive the full perspective, please contact us.