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Quarterly Commentary, Q4 2021

Benchmark Returns for the Period Ended
December 2021

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 -0.57% -1.44% 2.91% 2.38%
Standard & Poor’s 500 11.03% 28.71% 18.47% 16.55%
Russell 1000 Value (large cap value) 7.77% 25.16% 11.16% 12.97%
Russell 2000 (small cap) 2.14% 14.82% 12.02% 13.23%
Russell 2000 Value (small cap value) 4.36% 28.27% 9.07% 12.03%
MSCI Europe, Australasia and Far East (EAFE) 2.69% 11.26% 9.55% 8.03%
MSCI Europe, Australasia and Far East (EAFE) Small Cap 0.07% 10.10% 11.04% 10.80%
MSCI Emerging Markets -1.31% -2.54% 9.87% 5.49%
Wilshire REIT 17.14% 46.18% 10.92% 11.47%

Quarterly Commentary

Global equity markets finished the year with another strong quarter. Real Estate Investment Trusts (REITs) led the way, returning 17.14% (per the Wilshire REIT Index). This was followed by U.S. large company stocks, returning 11.03% (per the S&P 500). The only major equity asset class to post a negative return was Emerging Markets (per the MSCI EM Index), returning ‑1.31%, as concerns about the Chinese economy weighed on that market segment.

Top of mind for investors in the fourth quarter was inflation as consumer prices increased 6.8% year over year as of November 2021 (per the Consumer Price Index). This marked the largest annual increase since 1982. Energy costs were a significant contributor to this number, but were not the only reason that prices continue to rise. It is fair to say that consumer demand is currently insatiable, and supply chains are having trouble keeping up.

Washington, D.C., remained in the news as well. Lawmakers were able to pass a $1 trillion bipartisan infrastructure bill in November 2021, which has received far less attention than the currently stalled Build Back Better plan. While there is no question that initial drafts of this bill had a number of fairly aggressive proposals, it has become evident that the slim majority the Democratic party holds in the Senate will not be able to pass a bill with such proposals. It remains to be seen what will emerge from the lawmaking process, but rest assured we are keeping our eye on it.

Last and certainly not least, the COVID-19 omicron variant arose and dented the holiday plans of many. While omicron appears more infectious that the delta variant that circulated earlier in 2021, it also seems to have less severe symptoms. Thankfully there are now more resources to combat the virus and mitigate serious illness; nevertheless, widespread infections are still taking a toll on the functionality of critical resources, such as airlines and public services.

As the returns at the top of this commentary illustrate, remaining disciplined in the face of turbulence served investors well once again in 2021. While it seems like a constant barrage of bad news, keep in mind that this quarter saw continued job growth with record revenues and profits for many public and private businesses. Sometimes the best action is restraint when it comes to worries about the news and its impact on your investments.

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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.