Noteworthy Developments

Global equities, as represented by the MSCI ACWI Index, appreciated strongly by 3.4% with all regions experiencing positive performance.

Global Equities

Global equities climbed by 3.4%, with US large-cap equities (S&P 500) up 2.8% while international developed (5.3%) and emerging market equities (1.8%) also delivered positive returns. US equity performance was driven by generally strong corporate earnings and economic data, and investor relief as Trump administration tariff policy through January appeared more benign than feared. This more benign tariff news buoyed investor sentiment for international developed stocks (particularly European equities), which had been depressed as international companies were feared to have more exposure to potential negative effects from tariffs. Globally, value stocks (4.2%) outperformed growth (2.6%) stocks. Communication services, healthcare, and financial sectors performed best (7.9%, 6.2% and 6.0%) while technology and consumer staples (-1.1% and 1.7%) performed worst.

Fixed Income

The US Aggregate Bond Index rose 0.5% with performance driven by coupon income and modest declines in bond yields across the curve. Both US government and investment grade corporate bonds were up 0.5%. High-yield bonds appreciated by 0.6% as high coupon rates were modestly augmented by tightening spreads. Leveraged loans were up 1.4%, with high coupon income and tighter spreads driving returns.

Alternatives

HFRX Global Hedge Fund Index was up 1.0% with most strategies delivering positive performance. Long/short equity and convertible arbitrage strategies performed best (2.1% and 1.7%) while global macro / trend following strategies performed worst at -0.2%.