October 2023 Monthly Index Returns

Hello and Happy November!

In stocks (equities):

  • All stock indexes shown had negative returns for the month and for the last 3 months.  In October, US Large Cap Growth led the way (-1.4%) while US Small Cap Growth was the worst performer (-7.7%).
  • While it clearly has fallen over the last two months, the MSCI ACWI is still posting a +6.7% YTD return and +10.5% over the last one year. 
  • There are questions about what exactly is causing markets to decline.  An article in today's Wall Street Journal provided four potential reasons including the Fed, belief of an impending recession, the war in the Middle East, and stocks were expensive so this is just a correction.  From our perspective, we would consider all of these potential factors, understanding there are likely others too, and wouldn't get too fixated on any one issue.
  • Another question is "when is non-US equity going to outperform the S&P 500?".  Well, if you look at the returns over the last year, the S&P 500 returned 10.1% but the MSCI World ex-USA was higher at 12.6% and the MSCI EM gained 10.8%, while the MSCI World ex-USA Small Cap Value was relatively even at 10.0%.

In bonds (fixed income):

  • Rising yields across the Treasury curve 2 yrs and longer had a negative impact for most bond categories with only the 3 month Till, 1-5 Yr Treasuries, 1-5 Yr Munis. and 1-5 Yr inflation protected bonds generated positive returns in October, with a similar story over the last 3 months.
  • All bond categories are positive over the 1 yr time frame with the exception of 5-10yr (-0.9%) and 10+ yr (-8.0%) Treasuries, highlighting the significant impact from the difference in duration.
  • A popular bond question has been "why shouldn't I just stay short term when yields are higher vs. long term bonds.  One of the things to think about is reinvestment risk and a recent article from Schwab highlights the impact and other things to think about.

Please let us know if you have any questions by emailing support@xyinvestmentsolutions.com

As an additional note, please keep in mind that these reflect historical performance of the current models, not necessarily how accounts were invested in the past.

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