Kai W. Hong, CFA
Managing Director & Chief Investment Strategist
November saw a consolidation of the market rally which began in mid-October. Market volatility continued to decline, and most days saw steady if unspectacular gains. The price of oil accelerated its collapse towards $60/barrel, a level last seen in during the depths of the recession in 2009, and correspondingly energy and energy-related stocks underperformed the broader market dramatically. Q3 GDP growth for the US was revised upwards (from +3.5% to +3.9%), but globally the trend was towards lowering growth expectations.
The US broad market Russell 3000 Index finished the month at +2.4%. US small cap stocks lagged meaningfully with the Russell 2000 Index returning +0.1%. Outside of the US, returns were more modest with the developed market MSCI World ex USA Index returning +1.2% while the MSCI Emerging Markets Index returned -1.1%.
Active manager performance was once again variable with stronger relative performance coming from overweights to larger size, growth, quality, and low volatility. Market volatility remained low from both a VIX and cross sectional volatility perspective, and after a spike in October, volumes returned to the low levels seen most of the year. In this environment, Core managers did quite well with Growth managers struggling and Value managers mixed.