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Monthly Global Markets Update | May 2020
Data as of 04.30.2020; Source: Morningstar, FactSet, Russell Investments, Barclays, U.S. Department of Treasury
EQUITY HIGHLIGHTS FIXED INCOME HIGHLIGHTS
Stock Indexes YTD Bond Indexes YTD Other Indexes YTD U.S. Treasury Yields Rates/Commodities
MSCI ACWI IMI -13.90% Barclays US Aggregate 4.98% US Fund Multialternative -7.18% 6-month 0.11% Prime Rate 3.25%Russell 3000 -10.42% Barclays Gbl Treas xUS Hdg 2.28% DJ Equity All REIT -16.54% 1-year 0.16% LIBOR (3 Mo) 0.56%S&P 500 -9.29% Barclays US TIPS 4.52% Bloomberg Commodity -24.47% 3-year 0.24% Oil Price ($/barrel) $18.84 MSCI EAFE -17.84% Barclays US High Yield -8.75% 5-year 0.36% Gold ($/t oz) $1,694.20 MSCI EM -16.60% Barclays EM Aggregate -7.13% 10-year 0.64%
30-year 1.28%
• Equity markets rebounded in April with all constituents of the opportunity setproducing positive returns. U.S. growth stocks were the top performers in theopportunity set with the Russell Mid Cap Growth Index returning 15.66%, the Russell2000 Growth Index returning 14.89% and the Russell Top 200 Growth Index returning14.59%. The worst performers in the opportunity set were the MSCI Emerging MarketsIMI Value Index, which returned 8.91%, the MSCI World Ex U.S. Growth Index, whichreturned 8.20% and the MSCI World Ex U.S. Value Index, which returned 5.54%.
• Save for the U.S. Large Blend and Foreign Large Blend categories, active categories inthe active/passive opportunity set continued their year-to-date outperformance ofpassive categories. Average year-to-date outperformance of active versus passiveconstituents increased to 1.80% during the month of April.
• U.S. growth outperformance on a rolling five-year basis relative to value movedhigher in April. Growth’s outperformance has been driven partially by a prolongedlow economic growth environment and significant outperformance from large capinformation technology, communication services and consumer discretionarycompanies. Stretched growth valuations could lead to improvement in value relativeperformance.
• All members of the fixed income opportunity set produced positive returns during themonth of April. The Bloomberg Barclays U.S. Credit Index led the way with a returnof 4.58% followed by the Bloomberg Barclays U.S. Corp. High Yield Index, whichreturned 4.51% and the Bloomberg Barclays U.S. TIPS Index, which returned 2.78%.The worst performers in the opportunity set were the Bloomberg Barclays U.S.Government Index, which returned 0.63%, the Bloomberg Barclays U.S. MBS Index,which returned 0.64% and the Bloomberg Barclays Global Treasury Ex U.S. HedgedIndex, which returned 0.95%.
• Ten-year government bond yields of select countries generally fell during the month ofApril. U.K. yields dropped by the widest margin at 10 basis points (bps), followed byGerman yields, which experienced an 8 bp drop while the U.S. and France both sawten-year yields decrease by 6 bps. Italy was the outlier in the opportunity set as its ten-year yield rose by 31 bps.
• Save for the seven-year maturity, municipal/treasury ratios increased across selectmaturities for the third straight month in April. As was the case in March,municipal/treasury ratios remain well above their long term average across allmaturities in the opportunity set.
Our investment experts share their perspectives on market events, economic data and developingthemes in our monthly review of the global capital markets.
2
Global Economic Snapshot
Japan data as of 12.31.2019, U.S. and Eurozone data as of 03.31.2020; Source: FactSet
Japan data as of 03.31.2020, U.S. and Eurozone data as of 04.30.2020; Source: FactSet; The sudden increase inJapan CPI growth in 2014 coincided with an increase in national sales tax that impacted final price levels.
Data as of 03.31.2020; Source: FactSet
Data as of 04.30.2020; Source: FactSet
• The negative economic impacts of COVID-19 has become more apparent in recent data releases, particularly as April data begins to be available.• After bumping along 50-year lows in recent months, the unemployment rate spiked to 14.7% in April, easily a 50-year high.• First quarter GDP growth was sharply negative in both the U.S. and Europe. YOY growth has turned negative in Europe and is barely positive in the U.S.• Inflation in the U.S. and Europe was sharply negative in April, dragging down year-over-year core inflation rates.• U.S. industrial production plummeted in March, taking the year-over-year number sharply negative.
Note: Please see Appendix for important definitions.
-10.00-8.00-6.00-4.00-2.000.002.004.006.008.00
Jun-
00
Apr
-01
Feb-
02
Dec
-02
Nov
-03
Sep-
04
Jul-
05
Jun-
06
Apr
-07
Feb-
08
Jan-
09
Nov
-09
Sep-
10
Aug
-11
Jun-
12
Apr
-13
Mar
-14
Jan-
15
Nov
-15
Oct
-16
Aug
-17
Jun-
18
May
-19
Perc
ent (
%)
YOY Real GDP Growth ($U.S.)
U.S. Eurozone Japan
-7.00
-5.00
-3.00
-1.00
1.00
3.00
5.00
7.00
-20.00-15.00-10.00
-5.000.005.00
10.0015.0020.00
May
-00
Jan-
01Se
p-01
May
-02
Jan-
03Se
p-03
May
-04
Jan-
05Se
p-05
May
-06
Jan-
07Se
p-07
May
-08
Jan-
09Se
p-09
May
-10
Jan-
11Se
p-11
May
-12
Jan-
13Se
p-13
May
-14
Jan-
15Se
p-15
May
-16
Jan-
17Se
p-17
May
-18
Jan-
19Se
p-19
Perc
ent (
%)
YoY U.S. Industrial Production and Productivity
U.S. Industrial Production (LHS) U.S. Labor Productivity (RHS)
0.002.004.006.008.00
10.0012.0014.0016.00
May
-00
Jan-
01Se
p-01
May
-02
Jan-
03Se
p-03
May
-04
Jan-
05Se
p-05
May
-06
Jan-
07Se
p-07
May
-08
Jan-
09Se
p-09
May
-10
Jan-
11Se
p-11
May
-12
Jan-
13Se
p-13
May
-14
Jan-
15Se
p-15
May
-16
Jan-
17Se
p-17
May
-18
Jan-
19Se
p-19
Perc
ent (
%)
U.S. - Unemployment Rate
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
May
-00
Jan-
01Se
p-01
May
-02
Jan-
03Se
p-03
May
-04
Jan-
05Se
p-05
May
-06
Jan-
07Se
p-07
May
-08
Jan-
09Se
p-09
May
-10
Jan-
11Se
p-11
May
-12
Jan-
13Se
p-13
May
-14
Jan-
15Se
p-15
May
-16
Jan-
17Se
p-17
May
-18
Jan-
19Se
p-19
Perc
ent (
%)
Core Consumer Price Index (YoY Growth)
U.S. Eurozone Japan
3
U.S. Economic IndicatorsL
ead
ing
Coi
nci
den
tL
aggi
ng
• In the week ending May 1st the four-week moving average of Initial Jobless Claims was 4,518,000 a decrease of 861,500 from the previous week's revised average.Initial Jobless Claims
• ISM Manufacturing registered 41.5% in April a 7.6 percentage point decrease over the previous reading. A reading below 50.0% indicates contraction.
• ISM Manufacturing New Orders registered 27.1% in April a 15.1 percentage point decrease over the previous reading.
• ISM Non-Manufacturing registered 41.8% in April a 10.7 percentage point decrease over the previous reading.
Manufacturing
• Building permits fell 7.0% in March but have risen 4.8% over the past year.Housing/Construction
• The Consumer Confidence Index fell in April to 86.9 compared to 118.8 in March.Consumer Confidence
• Total Nonfarm Payroll employment fell 20,500,000 in April while the unemployment rate rose to 14.7%.Nonfarm Payrolls
• Industrial Production fell 5.4% in March and is down 5.5% over the past year.Industrial Production
• Real Disposable Personal Income fell 1.7% in March but remains up 0.1% over the past year.Personal Income
• This ratio was -0.1% in March and 0.6% year-over-year. Consumer borrowing tends to lag improvements in personal income by many months because people remain hesitant to take on new debt until they are sure that their improved income level is sustainable.
Ratio of Consumer Installment Credit to Personal Income
• CPI (All Items) fell 0.4% in March and is up 1.5% over the trailing one year period. • CPI (Core) fell 0.1% in March and is up 2.1% over the trailing one year period. Inflation
Source: FactSet
4
Currency
• The Trade-Weighted U.S. Dollar Index (Major Currencies) fell -0.8% through April and the index is up 3.9% year-to-date. The dollar rose 0.2%versus the Euro in April.
Data as of 04.30.2020; Source: FactSet
80.00
85.00
90.00
95.00
100.00
105.00
110.00
115.00
120.00
May
-10
Oct
-10
Mar
-11
Aug
-11
Jan-
12Ju
n-12
Nov
-12
Apr
-13
Sep-
13Fe
b-14
Jul-
14D
ec-1
4M
ay-1
5O
ct-1
5M
ar-1
6A
ug-1
6Ja
n-17
Jun-
17N
ov-1
7A
pr-1
8Se
p-18
Feb-
19Ju
l-19
Dec
-19
Nominal Trade-Weighted U.S. Dollar Major Currencies
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
May
-10
Oct
-10
Mar
-11
Aug
-11
Jan-
12Ju
n-12
Nov
-12
Apr
-13
Sep-
13Fe
b-14
Jul-
14D
ec-1
4M
ay-1
5O
ct-1
5M
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6A
ug-1
6Ja
n-17
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17N
ov-1
7A
pr-1
8Se
p-18
Feb-
19Ju
l-19
Dec
-19
Euro per U.S. Dollar
5
Global Equity Markets
Source: Morningstar, Russell Investments
Source: Morningstar, Russell InvestmentsMedian return of Morningstar open-end fund category (institutional share class). Russell return of U.S. categories.
Data as of 04.30.2020; Source: Morningstar
• Equity markets rebounded in April with all constituents of the opportunityset producing positive returns. U.S. growth stocks were the top performersin the opportunity set with the Russell Mid Cap Growth Index returning15.66%, the Russell 2000 Growth Index returning 14.89% and the Russell Top200 Growth Index returning 14.59%. The worst performers in theopportunity set were the MSCI Emerging Markets IMI Value Index, whichreturned 8.91%, the MSCI World Ex U.S. Growth Index, which returned8.20% and the MSCI World Ex U.S. Value Index, which returned 5.54%.
• Save for the U.S. Large Blend and Foreign Large Blend categories, activecategories in the active/passive opportunity set continued their year-to-dateoutperformance of passive categories. Average year-to-date outperformanceof active versus passive constituents increased to 1.80% during the month ofApril.
• U.S. growth outperformance on a rolling five-year basis relative to valuemoved higher in April. Growth’s outperformance has been driven partiallyby a prolonged low economic growth environment and significantoutperformance from large cap information technology, communicationservices and consumer discretionary companies. Stretched growthvaluations could lead to improvement in value relative performance.
-40.00
-20.00
0.00
20.00
MSCI ACWIIMI
RussellTop 200
Value
RussellTop 200Growth
RussellMid Cap
Value
RussellMid CapGrowth
Russell2000 Value
Russell2000
Growth
MSCIWorld Ex
USA Value
MSCIWorld Ex
USAGrowth
MSCIWorld Ex
USA SmallCap
MSCI EMIMI Value
MSCI EMIMI Growth
Equity Market PerformanceAs of 04.30.2020
1-Month 1-Year
-11.82
-23.13
-8.34
-27.42
-12.32
-18.21 -17.81
-10.62
-26.22
-11.29
-29.42
-17.83 -17.47 -18.78
-40.00
-30.00
-20.00
-10.00
0.00
U.S.Large Blend U.S. Mid-Cap Value U.S. Mid-CapGrowth
U.S. Small CapValue
U.S. Small CapGrowth
Foreign LargeBlend
DiversifiedEmerging Mkts
Active vs. PassiveAs of 04.30.2020
Active YTD Passive YTD
-6.00-4.00-2.000.002.004.006.008.00
10.00
Dec
-07
May
-08
Oct
-08
Mar
-09
Aug
-09
Jan-
10
Jun-
10
Nov
-10
Apr
-11
Sep-
11
Feb-
12
Jul-
12
Dec
-12
May
-13
Oct
-13
Mar
-14
Aug
-14
Jan-
15
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-15
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-16
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17
Jul-
17
Dec
-17
May
-18
Oct
-18
Mar
-19
Aug
-19
Jan-
20
Rolling 5-Year Return DifferentialRussell 3000 Growth minus Russell 3000 Value
6
Fixed Income Markets
Source: Morningstar, Barclays
Data as of 03.31.2020; Source: FactSet, U.S. Department of Treasury
Source: Thompson Reuters; Sterling Capital Management Analytics.
• All members of the fixed income opportunity set produced positive returnsduring the month of April. The Bloomberg Barclays U.S. Credit Index ledthe way with a return of 4.58% followed by the Bloomberg Barclays U.S.Corp. High Yield Index, which returned 4.51% and the Bloomberg BarclaysU.S. TIPS Index, which returned 2.78%. The worst performers in theopportunity set were the Bloomberg Barclays U.S. Government Index, whichreturned 0.63%, the Bloomberg Barclays U.S. MBS Index, which returned0.64% and the Bloomberg Barclays Global Treasury Ex U.S. Hedged Index,which returned 0.95%.
• Ten-year government bond yields of select countries generally fell duringthe month of April. U.K. yields dropped by the widest margin at 10 basispoints (bps), followed by German yields, which experienced an 8 bp dropwhile the U.S. and France both saw ten-year yields decrease by 6 bps. Italywas the outlier in the opportunity set as its ten-year yield rose by 31 bps.
• Save for the seven-year maturity, municipal/treasury ratios increased acrossselect maturities for the third straight month in April. As was the case inMarch, municipal/treasury ratios remain well above their long term averageacross all maturities in the opportunity set.
-10.00
0.00
10.00
20.00
Barclays USAgg Bond
Barclays USGovernment
Barclays USCredit
Barclays USMBS
BarclaysGlobal Trsy Ex
US TR Hdg
Barclays USCorp High
Yield
Barclays USTIPS
Barclays EMUSD Agg
Bond Market PerformanceAs of 04.30.2020
1 Mo 1 Yr
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
01/3
1/01
07/3
1/01
01/3
1/02
07/3
1/02
01/3
1/03
07/3
1/03
01/3
0/04
07/3
0/04
01/3
1/05
07/2
9/05
01/3
1/06
07/3
1/06
01/3
1/07
07/3
1/07
01/3
1/08
07/3
1/08
01/3
0/09
07/3
1/09
01/2
9/10
07/3
0/10
01/3
1/11
07/2
9/11
01/3
1/12
07/3
1/12
01/3
1/13
07/3
1/13
01/3
1/14
07/3
1/14
01/3
0/15
07/3
1/15
01/3
1/16
07/3
1/16
01/3
1/17
07/3
1/17
01/3
1/18
07/3
1/18
1/31
/201
97/
31/2
019
1/31
/202
0
10-Year Government Bond Yields
U.S. Germany France Italy U.K.
484409
319246 235
56 58 60 66 740
100
200
300
400
500
600
2 Year Maturity 3 Year Maturity 5 Year Maturity 7 Year Maturity 10 Year Maturity
Perc
ent
Municipal/Treasury Yield Ratios Over The Last 5 YearsAs of 04.30.2020
Maximum Current Average
7
Fixed Income Spreads and TIPS Breakeven
Data as of 04.30.2020; Source: Federal Reserve Board of GovernorsData as of 04.30.2020; Source: FactSet
Data as of 04.30.2020; Source: Barclays Data as of 05.01.2020; Source: Barclays
Note: Please see Appendix for important definitions.
• Investment Grade and High Yield corporate bond spreads stabilized and moved significantly lower in April following the spike higher in March.• Market inflation expectations as measured by TIPS breakeven rates increased in April but remain very low relative to history.• After a spike in March, Emerging Market debt spreads stabilized in April. The yield spread of U.S. to Global Treasuries was little changed in April and remains
below the historical average.
0
200
400
600
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1000
1200
1400
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-96
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97N
ov-9
7A
ug-9
8M
ay-9
9Fe
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-01
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-02
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03N
ov-0
3A
ug-0
4M
ay-0
5Fe
b-06
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-06
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-07
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-08
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09N
ov-0
9A
ug-1
0M
ay-1
1Fe
b-12
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May
-14
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15N
ov-1
5A
ug-1
6M
ay-1
7Fe
b-18
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-18
Aug
-19
Bas
is P
oint
s
EM Debt OAS
Blended Treasury Spread Average
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Feb-
99O
ct-9
9Ju
n-00
Feb-
01O
ct-0
1Ju
n-02
Feb-
03O
ct-0
3Ju
n-04
Feb-
05O
ct-0
5Ju
n-06
Feb-
07O
ct-0
7Ju
n-08
Feb-
09O
ct-0
9Ju
n-10
Feb-
11O
ct-1
1Ju
n-12
Feb-
13O
ct-1
3Ju
n-14
Feb-
15O
ct-1
5Ju
n-16
Feb-
17O
ct-1
7Ju
n-18
Feb-
19O
ct-1
9
Perc
ent (
%)
10-Year TIPS Breakeven
Breakeven Average
-2.00
-1.00
0.00
1.00
2.00
3.00
Aug
-00
Apr
-01
Dec
-01
Aug
-02
Apr
-03
Dec
-03
Aug
-04
Apr
-05
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-05
Aug
-06
Apr
-07
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-07
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-08
Apr
-09
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-09
Aug
-10
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-11
Dec
-11
Aug
-12
Apr
-13
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-13
Aug
-14
Apr
-15
Dec
-15
Aug
-16
Apr
-17
Dec
-17
Aug
-18
Apr
-19
Dec
-19
Perc
ent (
%)
Yield Spread of Barclays U.S. Treasury Index to Global Ex-U.S. Treasury Index
Yield Spread Average
0
400
800
1200
1600
2000
0100200300400500600700
Apr
-00
Dec
-00
Aug
-01
Apr
-02
Dec
-02
Aug
-03
Apr
-04
Dec
-04
Aug
-05
Apr
-06
Dec
-06
Aug
-07
Apr
-08
Dec
-08
Aug
-09
Apr
-10
Dec
-10
Aug
-11
Apr
-12
Dec
-12
Aug
-13
Apr
-14
Dec
-14
Aug
-15
Apr
-16
Dec
-16
Aug
-17
Apr
-18
Dec
-18
Aug
-19
Bas
is P
oint
s
20-Year U.S. Corporate OAS
U.S. Corporate Investment Grade (LHS) U.S. Corporate High Yield (RHS)
8
U.S. Treasury Yield Curve
Data as of 05.08.2020; Source: FactSet
• Save for the 30-year, Treasury yields fell across the opportunity set month-over-month. The five-year yield decreased by 0.15% during the month, which was themost pronounced decrease across the opportunity set. As noted, the 30-year yield, which increased 0.02%, was the only maturity in the opportunity set toregister an increase.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
3-Month 6-Month 1-Year 2-Year 5-Year 7-Year 10-Year 30-Year
Yiel
d
One Month Ago
One Year Ago
5/08/2020
9
Global Equity Market Fundamentals
Data as of 04.30.2020; Source: Russell, MSCIData as of 04.30.2020; Source: Bloomberg, Online Data Robert Shiller “US Stock Markets 1871-Present and CAPE Ratio”
Data as of 04.30.2020; Source: Russell, MSCIData as of 04.30.2020; Source: FactSet, Russell, Bureau of Labor Statistics, Sterling Capital Analytics
• The U.S. cyclically adjusted earnings yield moved lower in April as equity prices rallied. Long-term real U.S. sales growth improved slightly in April but islikely to weaken as the impacts of the coronavirus are more fully reflected in financial results.
• In April, the revenue to firm value ratio moved lower across U.S. and international markets.• Following the April rally in equities, global equity dividend yields moved lower. International Developed yields continue to provide a significant income
advantage over the U.S.
Note: Please see Appendix for important definitions.
0%
5%
10%
15%
20%
25%
1881
1884
1888
1892
1896
1899
1903
1907
1911
1914
1918
1922
1926
1929
1933
1937
1941
1944
1948
1952
1956
1959
1963
1967
1971
1974
1978
1982
1986
1989
1993
1997
2001
2004
2008
2012
2016
2019
U.S. Cyclically Adjusted Earnings Yield
-15.00%-10.00%
-5.00%0.00%5.00%
10.00%15.00%20.00%25.00%30.00%
Jan-
89Ja
n-90
Jan-
91Ja
n-92
Jan-
93Ja
n-94
Jan-
95Ja
n-96
Jan-
97Ja
n-98
Jan-
99Ja
n-00
Jan-
01Ja
n-02
Jan-
03Ja
n-04
Jan-
05Ja
n-06
Jan-
07Ja
n-08
Jan-
09Ja
n-10
Jan-
11Ja
n-12
Jan-
13Ja
n-14
Jan-
15Ja
n-16
Jan-
17Ja
n-18
Jan-
19Ja
n-20
U.S. 3 Year Real Revenue Growth –Russell 3000 Non-Financials
0.20.30.40.50.60.70.80.9
May
-06
Oct
-06
Mar
-07
Aug
-07
Jan-
08Ju
n-08
Nov
-08
Apr
-09
Sep-
09Fe
b-10
Jul-
10D
ec-1
0M
ay-1
1O
ct-1
1M
ar-1
2A
ug-1
2Ja
n-13
Jun-
13N
ov-1
3A
pr-1
4Se
p-14
Feb-
15Ju
l-15
Dec
-15
May
-16
Oct
-16
Mar
-17
Aug
-17
Jan-
18Ju
n-18
Nov
-18
Apr
-19
Sep-
19Fe
b-20
Revenue to Firm Value
Russell 3000 MSCI EAFE MSCI Emerging Markets Index
0.00
1.00
2.00
3.00
4.00
5.00
6.00
May
-96
Feb-
97N
ov-9
7A
ug-9
8M
ay-9
9Fe
b-00
Nov
-00
Aug
-01
May
-02
Feb-
03N
ov-0
3A
ug-0
4M
ay-0
5Fe
b-06
Nov
-06
Aug
-07
May
-08
Feb-
09N
ov-0
9A
ug-1
0M
ay-1
1Fe
b-12
Nov
-12
Aug
-13
May
-14
Feb-
15N
ov-1
5A
ug-1
6M
ay-1
7Fe
b-18
Nov
-18
Aug
-19
Dividend Yield
Russell 3000 Index MSCI EAFE Index MSCI Emerging Markets Index
Appendix
Core Consumer Price Index: Core inflation is a measure of inflation that excludes certain items, usually food and energy, that face volatile price movements.
Option Adjusted Spread (OAS): A bond’s yield spread over comparable maturity government bonds, adjusted for any embedded options.
Real GDP: Real gross domestic product (GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year,expressed in base-year prices.
Revenue to Firm Value: Total Index Revenues of the past 12 months divided by the sum of equity market value and the value of total debt. This is a measure of total salesgenerated on the total value (debt plus equity) of firms in the index.
TIPS Breakeven: The inflation rate implied by the spread in yield between U.S. TIPS (Treasury Inflation Protected Securities) and nominal U.S. Government Bonds of equalmaturity.
U.S. 3-Year Real Revenue Growth, Russell 3000 Non-Financials: For the Russell 3000 excluding financial firms, the percentage change in trailing 12-month inflationadjusted revenue over 12-month inflation adjusted revenue three years prior.
U.S. Cyclically Adjusted Earnings Yield: The 10-year average of annual, inflation adjusted earnings divided by the current inflation adjusted price of the S&P 500 index. Thismeasure is the inverse of the Shiller CAPE Ratio.
YOY US Productivity Growth: The year-over-year growth in real U.S. output produced per hour worked for non-farm workers.
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Technical Terms
The volatility of an index varies greatly; all indices are unmanaged and investments cannot be made directly in an index.The Bloomberg Barclays Emerging Markets Hard Currency Aggregate Index is a flagship hard currency Emerging Markets debt benchmark that includes USD-denominated debt from sovereign, quasi-sovereign, and corporate EM issuers.The Bloomberg Barclays Global Treasury Ex US Hedged Index is comprised of securities issued by developed ex. US and emerging market governments. The index is hedged agains constituent currencies versus the US dollar.The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index composed of securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with indexcomponents for government and corporate securities, mortgage pass-through securities, and asset-backed securities. It is not possible to invest in the Bloomberg Barclays U.S. Aggregate Bond Index, which is unmanaged and does not incurfees and charges.The Bloomberg Barclays U.S. Corporate High Yield Index measures the US corporate market of non-investment grade, fixed-rate corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P isBa1/BB+/BB+ or below.The Bloomberg Barclays US Credit Index measures the investment grade, US dollar-denominated, fixed-rate, taxable corporate and government related bond markets. It is composed of the US Corporate Index and a non-corporate componentthat includes foreign agencies, sovereigns, supranationals and local authorities.The Bloomberg Barclays US Government Index is comprised of securities issued by the US government and its agencies with at least one year until final maturity.The Bloomberg Barclays U.S. MBS Index covers the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). It is formed by grouping the universe of individual fixed rate MBS pools intogeneric aggregates.The Bloomberg Barclays US Treasury Inflation-Linked Bond Index (Series-L) measures the performance of the US Treasury Inflation Protected Securities (TIPS) market. Federal Reserve holdings of US TIPS are not index eligible and areexcluded from the face amount outstanding of each bond in the index.The Bloomberg Commodity Indexand related sub-indices are composed of futures contracts on physical commodities and represents 22 separate commodities traded on US exchanges, with the exception of aluminum, nickel and zinc.The Dow Jones Equity All REIT Index is designed to measure all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as equity REITs according to the S&P Dow Jones Indices REIT Industry ClassificationHierarchy. These companies are REITs that primarily own and operate income-producing real estate.The MSCI ACWI Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.The MSCI EAFE Index is a free float-adjusted market capitalizaiton index that is desinged to measure the equity market performance of developed markets, excluding the US and Canada.The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.The MSCI Emerging Markets Growth Index captures large and mid cap securities exhibiting overall growth style characteristics across 26 Emerging Markets (EM) countries. The growth investment style characteristics for index construction aredefined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate and long-term historical EPS growth trend and long-term historical sales per share growth trend.The MSCI Emerging Markets Value Index captures large and mid cap securities exhibiting overall value style characteristics across 26 Emerging Markets (EM) countries. The value investment style characteristics for index construction aredefined using three variables: book value to price, 12-month forward earnings to price and dividend yield.The MSCI ACWI ex USA Growth Index captures large and mid cap securities exhibiting overall growth style characteristics across 22 Developed Markets (DM) countries and 26 Emerging Markets (EM) countries.The MSCI World ex USA Small Cap Index captures small cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States). With 2,529 constituents, the index covers approximately 14% of the free float-adjustedmarket capitalization in each country.The MSCI World ex USA Value Index captures large and mid cap securities exhibiting overall value style characteristics across 22 of 23 Developed Markets countries.The Russell 2000® Growth Index measures the performance of growth style of investing in small cap U.S. stocks. The Growth Index contains those Russell 2000 securities with greater-than-average growth orientation.The Russell 2000® Value Index measures the performance of value style of investing in small cap U.S. stocks. The Value Index contains those Russell 2000 securities with less-than-average growth orientation. Securities in the Value Indexgenerally have lower price-to-book and price-to-earnings ratios than those in the Growth Index.The Russell 3000® Index measures the performance of the 3,000 largest US companies based on total market capitalization.The Russell Midcap® Growth Index measures the performance of growth styles of investing in Mid Cap U.S. stocks. The Growth Index contains those Russell Mid Cap securities with greater-than-average growth orientation.The Russell Midcap® Value Index measures the performance of value style of investing in Mid Cap U.S. stocks. The Value Index contains those Russell Mid Cap securities with less-than-average growth orientation. Securities in the Value Indexgenerally have lower price-to-book and price-to-earnings ratios than those in the Growth Index.The Russell Top 200® Growth Index offers measures the performance of the especially large cap segment of the US equity universe represented by stocks in the largest 200 by market cap. It includes Russell Top 200® Index companies withhigher growth earning potential as defined by Russell's leading style methodology.The Russell Top 200 Index is an index of the largest 200 companies in the Russell 3000 index. It is commonly used as a benchmark index for U.S.-based ultra large-cap (mega-cap) stocks with the average member commanding a marketcapitalization of upwards of $200 billion.The S&P 500 is an unmanaged capitalization-weighted index of 500 U.S. stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.The Trade-Weighted US Dollar Index, also known as the broad index, is a measure of the value of the United States dollar relative to other world currencies. It is a trade weighted index that improves on the older U.S. Dollar Index by using morecurrencies and the updating the weights yearly.
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Index Information
The opinions contained in the preceding presentation reflect those of Sterling Capital Management LLC, and not those of BB&T Corporation now Truist Financial Corporation or itsexecutives. The stated opinions are for general information only and are not meant to be predictions or an offer of individual or personalized investment advice. They are notintended as an offer or solicitation with respect to the purchase or sale of any security. This information and these opinions are subject to change without notice. Any type ofinvesting involves risk and there are no guarantees. Sterling Capital Management LLC does not assume liability for any loss which may result from the reliance by any person uponsuch information or opinions.
Investment advisory services are available through Sterling Capital Management LLC, a separate subsidiary of BB&T Corporation now Truist Financial Corporation. Sterling CapitalManagement LLC manages customized investment portfolios, provides asset allocation analysis and offers other investment-related services to affluent individuals and businesses.Securities and other investments held in investment management or investment advisory accounts at Sterling Capital Management LLC are not deposits or other obligations ofBB&T Corporation now Truist Financial Corporation, Branch Banking and Trust Company now Truist Bank or any affiliate, are not guaranteed by Branch Banking and TrustCompany now Truist Bank or any other bank, are not insured by the FDIC or any other federal government agency, and are subject to investment risk, including possible loss ofprincipal invested.
The securities/instruments discussed in this material may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor’sindividual circumstances and objectives.
Asset allocation and diversification do not assure a profit or protect against loss in declining financial markets.
The indexes are unmanaged and are shown for illustrative purposes only. Indexes do not represent the performance of any specific investment. An investor cannot invest directly inan index.
The indexes selected by Sterling Capital Management to measure performance are representative of broad asset classes. Sterling Capital Management retains the right to changerepresentative indexes at any time.
Past performance is not indicative of future results.
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Disclosures
