Market Review - February 2021

Source:  Zephyr Style Advisor Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  Index performance assumes the reinvestment of dividends.

Source:  Zephyr Style Advisor
Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  Index performance assumes the reinvestment of dividends.

The major stock indexes posted positive returns in February, despite heightened volatility over concerns of rising interest rates and inflation expectations at the end of the month.  While rising rates are a potential concern as they increase borrowing costs and dampen corporate earnings, it should be also be seen as the light at the end of the tunnel as rates have been rising due to ongoing vaccinations, declining coronavirus cases and likely additional stimulus.  US stocks gained 2.8% for the month.  Small-cap stocks, which have led the market for the past several months, maintained their strength, with the Russell 2000 index gaining 6.2%.  International stocks lagged US stocks with developed markets finishing ahead of emerging markets.

Sector performance was mixed with seven out of eleven sectors with positive returns.  Energy was the best performing sector led by higher oil prices, while utilities was the worst.  Across styles, value stocks, which tend to more economically sensitive and include sectors like energy and financials, have outperformed growth stocks, which include sectors like technology, for the month and year.  This trend has benefited dividend stocks which has outperformed the broad stock markets for the month and year.

The major bond indexes had another negative month as interest rates rose sharply.  The yield on the 10-year Treasury note ended the month at 1.44%, up from 1.09% at the start of the month.  While most bonds struggled, high-yield bonds posted small positive returns. 

Gold fell -6.6% as the global economic recovery showed improvement, and the US dollar rose.  Commodities gained as oil rebounded after being crushed by weak demand in 2020. 

Relative to a globally balanced (60/40) equity/bond index, allocations to commodities, US REITS and global equities helped, while global bonds and gold hurt for the month.

Source:  Zephyr Style Advisor Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  Index performance assumes the reinvestment of dividends.

Source:  Zephyr Style Advisor
Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  Index performance assumes the reinvestment of dividends.


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This report is for informational purposes only, and is not a solicitation, and should not be considered as investment or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change.

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