At this time last year, the equity markets were enjoying a wave of enthusiasm spurred on by resurgent economic growth and corporate profits.  The S&P cruised to a gain of 7%, on it’s way to a 20% annual return.  The Nasdaq jumped 11% by the midway point of 2017 and finished the year up nearly 30%.  2018, however, has not been as smooth a ride.

As of June 30, 2018, the Dow slipped just a bit over 2%, as the S&P 500 rose slightly by 1.3%.  The Russell 2000 (small cap stocks) surged 7%, while the Nasdaq continued it’s impressive run and posted a 8.25% gain.  With interest rates rising, fixed income markets are down, led by the Barclay’s Aggregate Bond Index (-1.62%).  The Avista All-Equity Portfolio total return through June 30 is 2.7%, and the Fixed Income Portfolio is down just .32%.   On the international side, it’s been a rough six months, especially for emerging markets, as only three countries posted positive returns.  The chart below lists 35 country specific iShares ETFs and their respective six month returns.

CountryTickerReturn %
New ZealandENZL3.53%
United StatesIWB2.70%
IsraelEIS1.84%
RussiaERUS1.08%
FranceEWQ-0.23%
IrelandEIRL-0.48%
AustraliaEWA-0.53%
TaiwanEWT-0.58%
UKEWU-0.60%
NetherlandsEWN-2.31%
ItalyEWI-2.43%
ChinaMCHI-2.48%
JapanEWJ-2.62%
CanadaEWC-3.06%
MexicoEWW-3.12%
Hong KongEWH-3.28%
PeruEPU-3.33%
MalaysiaEWM-3.56%
BelgiumEWK-4.70%
IndiaINDY-4.99%
SingaporeEWS-5.66%
SwedenEWD-5.83%
SpainEWP-5.95%
AustriaEWO-6.09%
SwitzerlandEWL-6.16%
GermanyEWG-7.04%
ThailandTHD-9.50%
South KoreaEWY-9.64%
ChileECH-10.06%
South AfricaEZA-16.52%
IndonesiaEIDO-17.67%
BrazilEWZ-19.35%
PolandEPOL-19.54%
PhilipinesEPHE-22.03%
TurkeyTUR-28.24%

Although the U.S. appears to be moving forward with North Korean nuclear negotiations, tariffs and potential trade disputes with China and some of our allies has roiled markets and led to major spikes in volatility. Early market gains in January were met with a huge sell-off through early February, followed by a recovery until March 9th.  Another 200 point sell-off in the S&P followed until early April, when the markets reversed course and have since regained nearly all of it’s losses.  But higher energy prices (oil has moved higher by 23%) and a tight labor market have boosted inflation in the U.S. to a 6 year high, and the likelihood of continued trade issues means more volatility and uncertainty in the markets.  With equity valuations near all-time highs, we will look for opportunities to rebalance asset classes and re-allocate funds according to portfolio guidelines.  If you should have any questions about your portfolio(s), please give me a call.