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 Data source: Bloomberg

(Note: please refer to this link for supplemental 4Q2015 and YTD 2015 performance charts)

January 4, 2016 

4th Quarter 2015 Highlights

  • Global developed market stocks recovered from the 3Q sell-off although 4Q gains were reduced due to December month-end selling pressure. 
  • Defying typical year-end seasonal patterns (the so-called Santa Claus rally), global stocks underperformed due to the European Central Bank (ECB) disappointing expectations for aggressive quantitative easing, concerns that the U.S. economy cannot sustain a new U.S. Fed tightening regime, and more evidence of China slowdown affecting global commodities.
  • U.S. fixed income was mixed as the intermediate part of the curve (5-10 year) outperformed the short- and long-end while U.S. high yield suffered an exodus of investor flows related to several high profile fund closures (Third Avenue) and a drop in oil prices to the low $30s as OPEC, led by Saudi Arabia, sought to further squeeze the higher cost producers by increasing production.

2015 Year-End Review Highlights

  • This was a difficult year for most asset classes.  U.S. stocks, led by the S&P 500, ended slightly positive for the year while ex-U.S. stocks and bonds, in U.S. dollar terms, posted negative returns due to a strengthening U.S. dollar and global growth concerns.  
  • Plain vanilla U.S. fixed income was the best performing asset class this year, led by municipal debt and intermediate (5-10 year) Treasuries.  Riskier sectors, notably high yield debt, underperformed this year as many energy borrowers came under financial stress due to the precipitous drop in commodity prices. 
  • Global commodities and precious metals came under the most pressure this year led by a slowdown in commodity consumption (notably China) resulting in a glut of oversupply.  U.S. REITs turned in a better year of performance as the asset class benefited from robust industry demand and a benign rate environment.  

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