This Weekly Market Update reviews the top market headlines; U.S. Equities, International Equities, Fixed Income, REITs, Commodities

Recapping 2020

Despite the COVID-19 pandemic that threatened to wreak havoc on the global economy and a hotly contested and controversial U.S. Presidential election, financial assets showed tremendous resilience and provided healthy returns for investors in 2020. Coordinated fiscal and monetary stimulus allowed markets to rebound sharply from their March lows and provided the support necessary to propel an economic recovery. 

U.S. Equities: U.S. stocks in 2020 withstood tremendous volatility to once again produce double digit positive returns across all major broad market indices. The S&P 500 index posted an impressive total return of 18.4%, while small cap stocks rode a fourth quarter surge to even higher gains (Russell 2000 index, 20.0%). There was a dramatic disconnect between growth stocks and value stocks, with the former outperforming the latter by an overwhelming margin (Russell 1000 Growth index, 38.5%, vs. Russell 1000 Value index, 2.8%).

International Equities: International stocks again trailed U.S. stocks in 2020 but gained ground in the fourth quarter and posted solid positive returns for U.S. investors, partially fueled by the flagging dollar. Emerging market stocks outpaced developed market stocks for the year by a wide margin (MSCI Emerging Markets index, 18.3%, MSCI EAFE index, 7.8%, both in USD terms).

Fixed Income: Bonds once again produced better than anticipated returns in 2020 (Bloomberg Barclays U.S. Aggregate Index, +7.5%) as the Federal Reserve slashed interest rates to help stimulate the economy. Corporate spreads widened materially in March but quickly reverted to normal as investor panic receded.

REITs: REITs were one asset class that struggled in 2020 (FTSE NAREIT Equity Composite, -8.0%) as the pandemic exacerbated concerns in the retail sector and created new uncertainty for the office sector.

Commodities: Commodities saw mixed results in 2020, as energy lagged (the price of West Texas Intermediate crude oil dropped over 20% to $48.52 per barrel at year-end) while precious metals rallied (gold climbed almost 25% to close the year at $1,899 per ounce).

As of December 31, 2021
Month-to-Date Quarter-To-Date One-Year
MSCI All Country World 4.64% 14.68% 16.25%
S&P 500 3.84% 12.15% 18.40%
Russell 2000 8.65% 31.37% 19.96%
MSCI EAFE 4.65% 16.05% 7.82%
MSCI Emerging Markets 7.35% 19.70% 18.31%
FTSE NAREIT 3.29% 11.57% -8.00%
Bloomberg Commodity 4.97% 10.19% -3.12%
Barclays U.S. Aggregate 0.14% 0.67% 7.51%

Data from Morningstar Direct and FactSet. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.