Allocations
AT&T 401(k) – Q2, 2014
Spring is around the corner after a long winter, bringing renewed excitement for outdoor activities and some tax season stress. This is usually a time when people start assessing their financial situations due to filing taxes, which makes it an opportune time to review the past quarter, our current state and where we see risk in the markets:
Summary, Last Qtr: In Q1 we saw Ben Bernanke leave as the Federal Reserve chairman and the nomination of our first female chairman, Janet Yellen. Yellen is seen as very similar to Bernanke with a background that favors employment. In keeping to that background, Yellen kept the course in her first decision as Fed chairman and wants the economy to show more strength before tightening. The S&P 500 reacted favorably to Yellen’s lead, after a moderate decline early in the year, and is so far up 1.04% as of March 12th. The political environment remains uncertain with Russia invading Ukraine, a possible secession and the US taking the stance that Russia violated international law. Meanwhile the health care rollout continues with less-than-rosy enrollment numbers. Thus interest rates remain healthy for companies to borrow and equities to rally while the bond market has fits and starts.
Our Commentary: We continue to see equities as an area to overweight and the fixed income area as one to reduce exposure. With the political risk environment and the slow interest rate rise, we see this year as favoring equities but the ride will be bumpier than last year. US equities continue to lead, especially the small to middle sized growth companies, and we believe that will continue for the near future with international equities also an area for positive developments. For investors that can tolerate the additional equity exposure, consider increasing equity exposure and reducing bonds or at least shortening the duration of your bond exposure. For investors that do not want to take on the additional risk, short term bonds or a stable value fund can be a replacement of long bond exposure.
Our Investment Committee periodically monitors the markets and will continue to provide comments at the beginning of each quarter. Each portfolio is different and we recommend getting individual help, which we are happy to provide.
Here’s to spring and we will check back in Q2 2014!
-Investment Committee
International Investing:
International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks, and differences in accounting methods. Past performance cannot guarantee future results.
Bond Disclosure:
Fixed income securities carry interest rate risk. Fixed income securities also carry inflation risk and credit and default risks. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss.
Forward-Looking Statements:
Certain statements contained within are forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties.
Opinions voiced are not intended to provide specific advice and should not be construed as recommendations for any individual. To determine which investments may be appropriate for you, consult with your financial professional.
Indices are unmanaged measures of market conditions. It is not possible to invest directly into an index. Past performance is not a guarantee of future results.
