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Capital Market Review as of September 30, 2020

Market Updates

The recovery continues. Pandemic impacts to the economy and markets seemed to be reduced by the Fed’s accommodative monetary policy. The S&P 500 ended the third quarter up 8.9%. 

An improved economic outlook and slightly weaker dollar were catalysts for emerging markets and foreign developed markets. They were up 9.6% & 4.8% respectively. In broad terms, the U.S. GDP is up & unemployment is down providing fuel for the markets. A market recovery does not necessarily indicate an immediate economic recovery. The market is forward looking, typically forecasting the business environment 6 to 12 months into the future. 

We expect short-term interest rates to remain near zero for the foreseeable future. This helps to stimulate the economy allowing businesses and the government to borrow cheaply. However, it also means the bond market might be a poor source of yield in the near term. 

Given this challenge, we think it is an opportune time to consider alternative investment strategies to enhance a portfolio’s return potential. Diversified alternative investment strategies also have the capability of reducing overall portfolio volatility.  

Click here to read our full 3Q20 Capital Market Review.