skip to Main Content

Quarterly Commentary, Q1 2022

Benchmark Returns for the Period Ended
March 2022

RCG "r" Logo (2018)
Quarter Annualized
1 Year 5 Year 10 Year
US Treasury Bills (one month) 0.02% 0.04% 1.05% 0.56%
Barclays Capital US Gov’t/Credit Inter Bond -4.51% -4.10% 1.81% 1.85%
Standard & Poor’s 500 -4.60% 15.65% 15.99% 14.64%
Russell 1000 Value (large cap value) -0.74% 11.67% 10.29% 11.70%
Russell 2000 (small cap) -7.53% -5.79% 9.74% 11.04%
Russell 2000 Value (small cap value) -2.40% 3.32% 8.57% 10.54%
MSCI Europe, Australasia and Far East (EAFE) -5.91% 1.16% 6.72% 6.27%
MSCI Europe, Australasia and Far East (EAFE) Small Cap -8.53% -3.63% 7.42% 8.30%
MSCI Emerging Markets -6.97% -11.37% 5.98% 3.36%
Wilshire REIT -3.87% 29.14% 10.04% 9.90%

Quarterly Commentary

Despite markets enduring their worst quarter in two years, with all asset classes in negative territory, the final two weeks of the opening quarter of 2022 brought an impressive rebound. During a challenging and uncertain period, markets ultimately held their own—even amid geopolitical tensions between Ukraine and Russia, global supply chain issues, historic inflation, persistent COVID-19 cases, and the first of multiple planned rate hikes by the Federal Reserve. The workforce added nearly 1.6 million new jobs, bringing unemployment down to 3.6%, closing in on the pre-pandemic (February 2020) rate of 3.5%, a 50-year low. The latest data shows a strong 6.9% rise in GDP vs. 2.3% in the previous quarter, indicating that the U.S. economy is still relatively strong.

March 24 marked two years since the COVID-19 market low point. The S&P 500 was up 101.7% during that period, the best rolling two-year performance since 1937. For the quarter, the S&P 500 returned -4.6%. Small cap stocks, both domestic and international, were the worst-performing asset classes as represented by the Russell 2000 and EAFE small cap indexes with returns of -7.53% and -8.53%, respectively. After years of being overshadowed by growth stocks, value stocks demonstrated their importance in a well-diversified portfolio. The Russell 1000 and 2000 value indexes posted negligible losses of -0.74% and -2.4%. Real Estate Investment Trusts (REITs), as represented by the Wilshire REIT Index, declined -3.87%, retaining most of its impressive 46.18% return from 2021.

As the war in Ukraine continues, investors can expect market uncertainty and volatility. Unfortunately, history has given us many opportunities to analyze how markets react to world events. Geopolitical selloffs are often short-lived, even with events on our soil like the 9/11 terrorist attacks. For more details, please refer to our recent article, “Russia-Ukraine Conflict: Takeaways for Investors.”

Inflation rose during the first quarter of 2022 by 7.9%, per the Consumer Price Index, with the cost of grocery goods increasing by 8.6%. These rates haven’t been seen since the early 1980s and are significantly higher than the Fed’s target rate of 2.0%. After years of near-zero interest rates, the Fed has begun its long-anticipated efforts of taming this rampant inflation. With the first increase since 2018, the March quarter-point hike is likely just the beginning, with a consensus of 5 to 6 additional increases before year-end. Adjusting rates is a delicate balance between how much and when. In 1955 the then-Chairman of the Federal Reserve said, “[Our job is to be like] the chaperone who has ordered the punch bowl removed just when the party was really warming up.” Similarly, RCG will continue to be that “chaperone” and help you remain disciplined in these tumultuous times, just as we’ve done for over 30 years.

We're here to help

If you have thought about becoming a client or would like a second opinion on your current holdings, please contact us via the button below and we would be glad to assist you in achieving your financial goals.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the management of an actual portfolio. The index returns above assume reinvestment of all distributions. This information is for educational purposes only and should not be considered investment advice or an offer of any security for sale.