Investment Commentary, Research and Thought Leadership

April 2015

April 2015

Kai W. Hong, CFA
Managing Director & Chief Investment Strategist

In the absence of any significant macro news, the performance of markets appeared to reflect relative assessments over absolute fundamentals.  While March had seen more sustained shifts in market direction, most of the moves in April were confined to a range of -1% to +1%.  Of note was the continuation of the recovery in the price of oil from its March lows to an intermediate plateau of $60/barrel.  The major policy discussion was still the timing of Fed “lift-off” as a strengthening US labor market came against the backdrop of muted inflation data and lower growth expectations.

The US broad market Russell 3000 Index finished the month at +0.5%.  US small cap stocks reversed their recent leadership with the Russell 2000 Index returning -2.6%.  Outside of the US, returns continued to be robust with the developed markets MSCI World ex USA Index returning +4.3% and the developing markets MSCI Emerging Markets Index returning +7.7%.

Overall, active manager performance was mixed with Value and Core managers performing best on a relative basis.  At the sector level, the big story for the month was the strong rebound in Energy.  This benefitted those managers that had the stomach to either maintain or increase positions during the drawdown of the last several months.  Volatility and market volume remained low so allocation decisions were likely to be more impactful than security selection.  On a factor basis, a value orientation was helpful while smaller size, quality, low volatility, and momentum were all generally negative.