As we have emphasized in recent years, we keep a close eye on fiscal policy, monetary policy, and interest rates. A lot has remained the same since our previous quarterly recap as monetary policy is still tight, fiscal policy remains nonexistent, and interest rates, although hit with a slight decline in Q1 2023, remain at historically elevated levels. Due to this, we have maintained a defensive posture across our Strategic & Tactical models as we patiently await the end of this credit tightening cycle before taking on further risk.
Major equity markets like the S&P 500, Developed International, and Emerging Markets all saw gains in Q1, with the best-performing index being International. The U.S. came in second, following close behind. This short-term outperformance from a major index, rebounding from a challenging prior year, is common.
Technology was the shining star in Q1, bouncing back after being one of the worst-performing sectors in 2022. Consumer-Discretionary was the second-best performing sector. Both outperformed the broader market altogether.
Fixed income markets rebounded slightly to start the year after historical volatility and drawdowns in 2022. Rates remain at elevated levels, and we will continue to monitor closely to determine whether adjustments are needed to extend or shorten the duration of our portfolio.
Please see below for further detailed analysis and chart references. As always, don’t hesitate to reach out if you have any questions or want to discuss anything mentioned. We appreciate your trust in us during these turbulent times.
All the best,
Syntal Investment Team