Welcome to Rall Capital Management

End of Quarter Update for Q2, 2016

19 Jul

End of Quarter Update for Q2, 2016

End of Quarter Update for Q2, 2016

I know that it’s hard to believe, but a quick look at the calendar will confirm, 2016 is more than halfway over! Whoever said that time goes by more quickly as we get older was certainly correct.

On June 30th, we ended another quarter, and the end of a quarter is always a good time to update our clients on what’s been happening in the financial markets.

54855485 - asset allocation concept graph on blackboard

Obviously, your investment portfolio is an important part of your overall financial picture. However, it’s not the only part. We want to make sure that your retirement plans, estate documents, insurance policies, and other pieces of your financial picture are in order as well.

But, it is the end of a quarter and that makes it a good time to review the investment piece of your financial picture. So, let’s dig in…

Overall, it was a pretty decent quarter for a diversified portfolio. I’ll run through each asset class that we use in your portfolio for a bit more detail.

12425758 - wall street sign in new york with new york stock exchange background

US stocks were up a little more than 2% for the quarter. As of June 30, the Total Market Index, which includes over 3,000 US stocks, was up 4% year to date, although the index was down a little more than 1% for the month of June because of the Brexit selloff.

International stocks have been a bit of a drag on the rest of the portfolio. When I talk about International stocks, I’m referring to the developed markets, which includes Europe, Australia, and the Far East, and includes large companies, medium sized companies and small companies. The index was up for most of the second quarter, until the Brexit selloff hit and wiped away the gains. They finished flat for the quarter, but had a tough month in June, down 5% for the month. The index is up just over 1% year to date, as of June 30th.

The next asset class provided a strong lift to our portfolios, after a tough year in 2015. Emerging Markets consist of companies in countries which are still developing, like Russia, China, India, Latin America, and similar places. This can be a dicey asset class, which is why we give it a small allocation in our portfolios. But so far,this asset class has been hot. We saw a gain of 3% in the month of June, 4% for the second quarter and 11% year to date.

Speaking of hot asset classes, the real estate sector has been the portfolio leader for the year. Remember that in an investment portfolio, real estate means the companies that own real estate of some type and generate rental income from it…like hotels, storage facilities, apartment complexes, and malls. This asset class gained 7% in the month of June alone. It finished up 9% for the second quarter and has given us gains of 14% year to date.

27767504 - stock market index graphs background.

Next, we move over to the bond side of the portfolio. Like I’ve often said, bonds will never leave us too excited, or too depressed. However, a continued drift lower for interest rates has led to some decent gains on the bond side. Short term bonds, those with maturities of less than 3 years, are up just over 1% for the year, as of June 30th. Intermediate term bonds, those with maturities from three to ten years, are up a little more than 3.5% year to date and a little more than 1% for the quarter. TIPS, which are Treasury Inflation-Protected Securities, basically a government bond with an inflation rider, are up more than 3.5% year-to-date, and 2% for June and for the second quarter.

9391680 - a matrix illustrating the core principle of growing your investments - buying low and selling high

So, what does that mean for you? It might mean that your portfolio will be a little overweight in the emerging markets and real estate asset classes because they’ve moved up a good bit. It also means you might be a little underweight in international stocks, and maybe bonds. If so, when we do our regular monthly rebalance, we’ll selling a bit of the asset class that you are overweight in, and buying some of those where you might be a bit underweight. Remember, buying low and selling high is what we’re trying to do.

That’s it for portfolio news. The quarterly reports were uploaded to Document Center at the end of last week, so don’t hesitate to call with any questions once you’ve received them. One improvement we’ve been able to implement this quarter is that, in the interest of doing everything we can to protect your private data, we’ve been able to block out all but the last four numbers of your account numbers, so that if the statements were to somehow fall into the wrong hands, they won’t have any more details on your account than the last four digits.

And finally, we’ve just rolled out a new website and would love for you to check it out (if you’re viewing this as a blog post, you’ve already seen it!) The address is the same…www.RallCapital.com. But the site has been updated and has some new features we would like you to try. Any feedback you might have on the new site is also welcome and appreciated.

Thanks for being a valued client of Rall Capital Management.

2 comments

  1. Bob:
    Thanks for this update on the portfolio balances.
    Seem to be a nice mix for us.
    Joe R.

    Reply
  2. Thanks for the great update Bob!
    -Rebecca Z.

    Reply

Write a Reply or Comment