Recall for a moment March of 2020. It was an emotional time for many as we grappled with the idea of a pandemic. Life as we knew it was turned upside-down and we all had to make some pretty big changes to our daily lives. Now fast forward to April of 2021. If you weathered the storm and avoided the emotional urge to jump ship last March, you are seeing the benefits of staying the course.
Small cap stocks have had a strong 1st quarter with the Russell 2000 Index pulling 12.7% outperforming the S&P 500 Index's return of 6.17%.
Value stocks are right behind small cap stocks this first quarter with a 11.26% return after lagging behind the broader stock market last year.
International developed stocks are posting 3.48% returns for the quarter. Emerging markets stock had a lower return at 2.29%.
Bonds struggled last quarter due to rising interest rates. The U.S. aggregate bond index lost 3.37% first quarter. Longer-term bond funds are most affected in a rising interest rate environment. This is one of the reasons why we recommend keeping your bond allocation in short- and intermediate-term holdings. While nobody likes to see their bond funds lose money, they are still the best bet for investors to serve as a buffer against stock market volatility.
*Source for investment returns is Morningstar as of March 31, 2021. S&P 500 TR USD for S&P 500. Russell 2000 TR USD for small cap stock. Russell 1000 Value TR USD for value stocks. MSCI EAFE NR USD for developed international markets. MSCI EM NR USD for emerging markets stock. Barclays US Agg Bond TR USD for the US aggregate bond index.