Capitalism Stock Certificate 2011

1Q/2013: The Quarter in Review

Capitalism Stock Certificate 2011

The first quarter of 2013 was a quarter in which risk was rewarded. Once again, the market climbed a wall of worry centered on government shutdowns and budget sequestrations. On the international front, we continued to hear belligerent rhetoric from North Korea's Kim Jong-Un who actually threatened the United States with nuclear annihilation. The Syrian uprising continues to claim many lives and presents the possibility of proliferation of chemical weapons in the region. Meanwhile, Iran steadily progresses towards nuclear weapons capability, prompting questions about the timing of a possible preemptive strike by Israel or the United States. The on-going questionable financial stability of the European Union combined with aggressive currency moves by Japan's central bank along with worries about the popping of a Chinese real estate bubble creates greater uncertainty regarding international investments. All of these stories will continue to play out in 2013.

 

Domestic Equities

As shown in the table below, 1Q/2013 was a great quarter for US equities in general and small cap and value indexes in particular.

Returns of IFA Domestic Equity Indexes for 1Q/2013

Size/Style

Value

Blend

Growth

Large

13.50%

10.60%

  9.31%

Small

13.93%

12.51%

12.38%

Source: dfaus.com, vanguard.com, and ifaindexes.com

For the mixture of domestic equity indexes used in the majority of IFA's Index Portfolios, the 1Q/2013 return was 12.44%, which is 1.42% higher than the 11.02% return of the IFA US Total Stock Market Index.

 

International (Developed) Equities

As shown in the table below, 1Q/2013 was a decent quarter for international large cap value equities, and it was a great quarter for the small cap blend and small cap value segments:

Returns of IFA International Equity Indexes for 1Q/2013

Size/Style

Value

Blend

Large

  1.80%

  4.05%

Small

  7.91%

  6.23%

Source: dfaus.com and ifaindexes.com

For the mixture of international equity indexes used in the majority of IFA's Index Portfolios, the 1Q/2013 return was 4.44%.

 

Emerging Markets Equities

As shown in the table below, emerging markets provided a mixed bag in 1Q/2013, with weakness in Emerging Markets and Emerging Markets Value.

Returns of IFA Emerging Markets Indexes for 1Q/2013:

Emerging Markets

-2.13%

Emerging Markets Value

-0.96%

Emerging Markets Small

2.40%

Source: www.dfaus.com and ifaindexes.com

For the mixture of emerging markets indexes used in the majority of IFA's Index Portfolios, the 1Q/2013 return was 0.03%.

Real Estate

For 1Q/2013, the IFA real estate index was up 7.10%. This index is a blend of domestic and international real estate investment trusts (REITs). Domestic REITs were up 7.55%, while international REITs were up 6.38%.

 

Fixed Income

Continuing to play its role as a risk reducer with respect to equities, all of IFA's fixed income indexes ended 1Q/2013 with positive returns:

Returns of IFA Fixed Income Indexes for 1Q/2013:

One Year

0.15%

Two Year Global

0.20%

Short-Term Government

0.13%

Five Year Global

0.36%

Source: www.dfaus.com and ifaindexes.com

Interest rates continue to remain at very low levels relative to their historical averages. For the mixture of fixed income indexes used in the majority of IFA's Index Portfolios, the 1Q/2013 return was 0.21%.


Update: 4-16-2013