The Factor Report

Market Wrap

For the week ended February 21, 2025, stocks finished mixed but ultimately lower globally. It was a quiet start to the week as US markets were closed for Presidents' Day and Tuesday yielded little data. All eyes were on Wednesday's release of the Federal Reserve meeting minutes and those didn't contain any surprises. As expected, most central bank officials supported keeping monetary policy restrictive until inflation is more under control. On Thursday, Wal Mart's dour earnings outlook sent investors to the exits. It only got worse on Friday when Consumer Sentiment came in much lower than forecasted. Investors are now worried about stagflation - slowing economic growth with persistent inflation. Next week will bring the all-important Personal Consumption Expenditures inflation figure, the Fed's preferred measure, but we'll have to wait until Friday for it. It was another roller coaster week for bonds as yields again rose sharply the first half of the week and dropped sharply in the second half. As a result, the yield on the 10-year US treasury fell modestly to 4.43%.

Performance Summary

As shown in the chart, it was Emerging Markets that won the week as the US led Developed Markets lower. Within the US, neither the Tech-heavy Nasdaq nor the more traditional stocks of the Dow Jones Industrial Average were able to best the broader S&P 500. From a factor perspective, all factors except Momentum outperformed the global All Country World Index (ACWI).

In The News

A great piece on what investors need to think about when "swinging for the fences".

https://www.marketwatch.com/story/what-investors-should-consider-when-theyre-swinging-for-the-fences-according-to-this-award-winning-wall-street-researcher-d1435eee?mod=mw_latestnews

A proposal to raise retirement age for high earners.

https://www.thinkadvisor.com/2025/02/13/this-social-security-blueprint-would-raise-retirement-age-for-high-earners/?kw=This%20Social%20Security%20Blueprint%20Would%20Raise%20Retirement%20Age%20for%20High%20Earners&utm_source=email&utm_medium=enl&utm_campaign=newsroomupdate&utm_content=20250213&utm_term=ta&oly_enc_id=6911H2583589A7Z&user_id=3d158419d93f4751d4b3b79dd78d9abf446b89b61e92e7567cb4126b86cb53c5

The return of the bill to end taxes on Social Security benefits.

https://www.thinkadvisor.com/2025/02/12/bill-to-end-taxes-on-social-security-benefits-is-back/?kw=Bill%20to%20End%20Taxes%20on%20Social%20Security%20Benefits%20Is%20Back&utm_source=email&utm_medium=enl&utm_campaign=earlywire&utm_content=20250213&utm_term=tadv&oly_enc_id=6911H2583589A7Z&user_id=3d158419d93f4751d4b3b79dd78d9abf446b89b61e92e7567cb4126b86cb53c5

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.

All data and performance information sourced from Morningstar and MarketWatch, unless otherwise indicated.

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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