Thomas Luster, January 2014
As we look back on 2013, we are impressed with how the macroeconomic themes were so similar to 2012; modest progress toward recovery, Federal Reserve (the Fed) intervention, fiscal debates and significant new regulation—it seems like Groundhog Day (or Year). From an economic growth perspective, the U.S. has moved beyond the “muddle-through” recovery following the recession sparked by the credit crisis of 2008 and has entered the expansion phase of the cycle.
Equity Market Insight
Thomas E. Faust Jr., January 2014
The fourth quarter of 2013 saw the U.S. stock market cap off a powerful full-year rally that far surpassed the expectations of many investors going into the year. The S&P 500 Index advanced 10.51% for the three-month period ended December 31, hitting new all-time highs multiple times and finishing the year up 32.39%.
Income Market Insight
Payson F. Swaffield, January 2014
In 2013, the markets got their first taste of what I referred to in my last report as the post-post-crisis era. It was a year in which talk of “tapering” dominated the financial headlines – a reference to the U.S. Federal Reserve’s plans to scale back its purchases of long-term bonds, as a first step toward reducing its accommodative monetary policy.
Are you managing volatility or is it managing you?
• Market volatility has caused investors to make emotional decisions, resulting in performance that may have hindered their ability to reach investment goals.
• Eaton Vance believes that sound investment strategy should provide investors with tools for managing volatility, so the market’s inevitable fluctuations may work on their behalf.
• We discuss four approaches to managing volatility: reducing, navigating, harnessing and monetizing.
Confronting the tax drag
• The impact of the “tax drag” on investor portfolios can be significant over long time frames, potentially consuming a quarter or more of every dollar earned by the average investor.
• As federal tax rates have risen for many investors, so too has the risk of losing a larger portion of one’s returns to taxes—highlighting the need for a tax-aware investment approach.
• Municipal and tax-advantaged bond strategies, tax-efficient equities and solutions for high-networth investors can all help improve investors’ after-tax portfolio performance.
Solving the income puzzle: When traditional sources no longer complete the income picture, where’s an investor to turn?
Christopher Remington, Michael A. Cirami, Kathleen Gaffney, Scott Page; September 2013
• Income needs may be as high as they’ve ever been, while the yield potential from many traditional investment classes has dwindled to generational lows.
• Investors who remain in high-priced, low-yielding core bond strategies could experience loss of principal (and mounting retirement shortfalls) if interest rates revert toward their mean.
• We advocate creating an integrated, multi-pronged income plan that may offer yield potential that meets investor needs, while managing key risks found in the typical core fixed-income allocation.
The unloved bull market: Richard Bernstein on the U.S. equity rally
Richard Bernstein, June 2013
The U.S. equity market has seen quite a rally in 2013. Both the Dow Jones Industrial Average and the S&P 500 Index eclipsed their 2007 record closing highs in the first quarter and are up 17.4% and 16.7%, respectively, year-to-date as of May 15, 2013. Additionally, the S&P 500 has risen more than 140% from its bear market low on March 9, 2009, having done so against a slowgrowth economic backdrop.1
1 Source: Factset. The Dow Jones Industrial Average is a price-weighted average of 30 U.S. blue-chip stocks traded on the New York Stock Exchange and the NASDAQ. The S&P 500 Index is an unmanaged index of large-cap stocks commonly used as a measure of U.S. stock market performance. Index performance is historical and not indicative of future results. It is not possible to invest directly in an index.