Heady equity returns in October 2013 contributed to nudging the one-year returns for several asset classes near or beyond the upper bound of their historical typical ranges. On the flipside, some other asset classes came in lower than historical typical returns, and others performed in line with what history would have predicted.
Fixed income investors haven’t had it easy this year. And given today’s low interest rate environment it is unlikely that bond returns will bounce back immediately. However, this is not a reason for investors to abandon bonds.
The partial U.S. government shutdown and debt ceiling debates in Washington, D.C. didn’t hold markets back for long. By the end of the month, October turned out to be positive for most major asset classes.
With increased interest from advisors and investors in alternative investments, we took the opportunity to talk about trends in the asset class with Lance Babbit, Senior Portfolio Manager in Russell’s Alternative Investments group.
With concerns about the fiscal cliff and sequestration running high at the beginning of the year, few investors would have suspected that U.S. markets (Russell 3000® Index) would return 21% by September 30, 2013. For the remainder of 2013 and into 2014, Russell expects some equity market volatility – especially around the time the Federal Reserve’s taper talk turns into action. But, we are optimistic about opportunities in European, Japanese and Emerging Market equities.
Capital gain distributions are likely to increase for many mutual funds this calendar year. Unfortunately, that’s poor timing for investors whose tax rates have increased as a result of tax reforms this year. Soften the blow for your clients by making them aware of the potential issues now – rather than waiting until the tax bill arrives.
When the market reaches historic high-points (and we’re not in the midst of a frenzied bull market), many investors worry about a seemingly inevitable decline. As the saying goes, “what goes up must come down.” But this sense of inevitable decline may overstate the reality. Since 1995, the market has peaked 62 times.