The Factor Report

Market Wrap

Stocks were indecisive, but ultimately ended modestly higher for the week ended June 11, 2021. Investors didn't have much to react to. Instead, markets muddled around for the early part of the week in anticipation of the US inflation report. The Consumer Price Index was released on Thursday. Despite the feared impact of inflation on stocks and bonds, both rallied in response to the highest rate of price increases since 2008. The core rate (ex food and energy) was the highest in almost 30 years. However, there was solace to be taken from the fact that prices were coming off an extremely low level, exaggerating the percentage increase. Furthermore, the Federal Reserve continues to be dismissive of the inflation threat because of the aforementioned low base of comparison. For the week, bonds had an interesting reaction to strong inflation data and rose significantly, sending the US 10-year treasury yield down to 1.44%, according to MarketWatch.

Performance Summary

Geographically, all regions again had positive returns. The US led the way by far and Emerging Markets was barely above the flat line. There was a strong separation of sturdy companies this week as investors seemed to brace for a slowing of economic growth. As a result, from a factor perspective, Quality and Low Volatility were able to outpace the broader market. The long-term results continue to demonstrate factor efficacy, as shown in the table to the right. As can be seen, for the 15-year periods 3 out of 5 factors win although Size is close for a fourth.

In The News

Please click here for an interesting piece on the government’s ability to access a Bitcoin wallet related to the Colonial pipeline hijacking.

Please click here a closer look at the recent cost of living adjustment (COLA) estimate for social security.

Please click here for a great discussion about what inflation actually is…and what it isn’t. 

Disclosures

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s). Moreover, you should not assume that any of the above content serves as the receipt of, or as a substitute for, personalized investment advice from Metric Financial.

USA is the MSCI USA index, Non-US Developed is the MSCI EAFE index, Emerging Markets is the MSCI Emerging Markets index, and All Country World is the MSCI ACWI index. One cannot invest in an index. Because the factor indexes have varying inception dates, some of the returns provided are back-tested and do not represent actual performance. Inception dates are as follows:

Momentum = MSCI ACWI Momentum NR USD Index (Inception: 11/30/95)

Value = MSCI ACWI Enhanced Value NR USD Index (Inception: 5/29/15)

Quality = MSCI ACWI Quality NR USD Index (Inception: 5/29/92)

Low Volatility = MSCI ACWI Minimum Volatility (USD) NR USD Index (Inception: 5/28/93)

Size = MSCI ACWI Risk Weighted NR USD Index (Inception: 4/6/11)

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All written content is for information purposes only. Opinions expressed herein are solely those of Metric, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.