The first quarter brought bursts of optimism as the world continued its uneven recovery from the COVID-19 pandemic and the economic lockdowns that dominated 2020. Tremendous progress in the development of a vaccine and a thus far effective delivery system of administering doses to a meaningful proportion of the population have put the U.S. on a path to normalcy. During the quarter, some of the uncertainties in domestic politics were resolved as the new administration accomplished the much anticipated next round of fiscal stimulus to keep the economic recovery on track. The $1.9T American Rescue Plan Act was signed into law on March 11 and delivered another round of direct payments to individuals, enhanced unemployment benefits, and aid to states. Further stimulus measures may take shape in the months ahead as political dialogue turns toward infrastructure.
In our view, economic activity and corporate earnings will continue to rebound over the course of the year. Financial markets were mixed during the quarter. We believe sector and issuer selection in this environment is critical and favors active over passive management. Elevated cash levels and a high degree of personal savings will be a tailwind to growth.
Bloomberg Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. Bloomberg Barclays Municipal Bond Index is a market capitalization weighted index that measures the long-term tax-exempt bond market. J.P. Morgan GBI-EMGD tracks total returns for local currency debt instruments issued by emerging markets sovereign and quasi-sovereign entities to which international investors can gain exposure. J.P. Morgan CEMBI Index tracks U.S. dollar-denominated debt issued by emerging market corporations. J.P. Morgan EMBI Global Index tracks the total return for the U.S. dollar-denominated emerging markets debt, including Brady bonds, Eurobonds and loans. The Credit Suisse Leveraged Loan Index is a market-weighted index that tracks the investable universe of the U.S. dollar denominated leveraged loans. The Bloomberg Barclays U.S. High-Yield 2% Issuer Capped Bond Index is a market capitalization-weighted index that measures fixed rate non-investment grade debt securities of U.S. and non-U.S. corporations. No single issuer accounts for more than 2% of market cap. The indexes are calculated on a total return basis. The indexes are unmanaged, returns do not reflect any fees, expenses, or sales charges, and are not available for direct investment.
The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.
All investments carry a certain degree of risk, including possible loss of principal.
Past performance is not indicative of future results.