An unexpectedly strong March rally allowed the U.S. equity markets to recover from double digit losses earlier in the year and finish marginally positive. For the quarter, the benchmark S&P 500 gained 1.35% while the Intelligent Index Model Portfolio advanced 2.29% largely on the strength of small-cap and mid-cap value indices. Concern over the impact of negative interest rates and ongoing weakness in the global economy served as catalysts for a market correction that by mid-February saw the averages decline by over 11%. Reassurance from Fed Chairwoman Yellen and the Federal Open Market Committee that a more dovish approach to interest rates would be maintained calmed investors’ nerves and set the stage for March’s rally. The first quarter correction was particularly hard felt for the formerly beloved mega-cap growth and technology companies whose presumed meteoric growth became increasingly suspect. Discussed many times in prior quarterly updates, chasing performance in many high flying cult names is a juggling act of almost impossible proportions and one that we have found no value in engaging in.
Please take a moment to read our Intelligent Index Review for our complete commentary by Richard Greene, Managing Principal Emertus: