Our weighted average return in February was -0.47%. Since 2015, we have generated a net return of +37.50%.
In terms of investment strategy performance, our weighted average net returns for February were (a) +0.79% for conservative strategies, (b) -0.88% for balanced strategies, and (c) -0.53% for aggressive strategies.
Financial markets continued their positive trend in February, fueled by more encouraging US-China trade talks and heightened confidence that the Fed would not be raising rates in the near future. “Lower rates for longer” translated into higher prices for high yield debt across all markets and equities continued their positive trend. In February, the S&P 500 (SPY US) rose +3.24%, High Yield US corporate bonds (HYG US) rose +1.21%, Emerging Market bonds (EMB US) gained +0.40% and US investment grade bonds (BND US) returned -0.09%.
I am at a loss to report anything of note that actually happened in financial markets or world politics in February. Brexit discussions dragged on. Tariff implementation was extended and trade deal discussions continued without any actual agreements. Softer Chinese economic data was interpreted to mean greater Chinese stimulus going forward, but Chinese industry seems to be more concerned about tariffs. European growth continued to be anemic. European industry is also worried about tariffs. Data revealed that German economic growth was flat in the last quarter of last year.
Only the US showed that, despite the impact of the government shutdown, everything seemed to be going fairly well. Data showed that US GDP grew +2.6% in the fourth quarter. This was slower than the previous 3.4% quarter on quarter annualized growth rate in Q3, but showed that the US economy continues to be on a strong footing.
Looking at our investment performance, we were pleased at the returns for our conservative strategies, but our security selection let us down in our balanced and aggressive mandates. Long-term outperformance can only be achieved by high conviction stock picking, and some of our conviction holdings had a sub-par February. In terms of investment strategy, we continue to look for interesting companies that have not participated in the recent rally, but stand to benefit from continued lower interest rates and moderate economic growth.
On behalf of our Client Portfolio Management team, I thank you for your continued trust and support!
FULL DISCLOSURE: Please note that the opinions expressed in this blog should in no way be considered as investment advice or a solicitation to buy or sell securities.