Improving economic fundamentals including our march towards herd immunity to Covid-19 and the passage of a very large fiscal stimulus bill contributed to a strong start to the year. The vaccine rollout has been worldwide and is allowing for economic reopening and recovery across the globe. First quarter of 2021 posted positive returns across the stock market sectors – U.S. large cap +6.2%, U.S. small cap +12.7%, international stocks +3.5%. One of the most notable aspects of this quarter’s market results was the dramatic rotation away from tech stocks to quality value stocks. This rotation was a global phenomenon. Bonds were in general, negative for the quarter due to the U.S. stock markets hitting all-time highs along with higher inflation expectations. U.S. Bonds were -3.4% for the quarter.
The overall spectacular rise in the markets following market lows when the pandemic first hit in March of 2020 has many investors fearing a looming market correction. Of course, volatility is expected to be ever present. Diversification and disciplined rebalancing will likely always play an important role in attempting to mitigate market risk. But in the current environment of very low expected forward-looking return assumptions for the public markets, we believe it is virtually impossible to not take a hard look at alternative investments to potentially enhance your risk and return prospects.
CLICK HERE to read our full 1Q21 Capital Market Review.