3rd Quarter 2021 Market Commentary 


The major equity markets (S&P 500, EFA, EEM) have done well for the 3rd quarter, with the US markets being the shining star. While we think there will be some consolidation, we still expect this year to end positively.

After a positive 2nd quarter, fixed income posted slight negative returns in the 3rd as rates moved higher. All in all, fixed income remains in negative territory for the year. We continue to watch rates to determine necessary duration moves in our portfolio.

Sectors and factors of note are Technology (XLK), Real Estate (IYR), and Financials (XLF). We continue to see rotation in the market as it looks for new leadership. As rates move down, technology tends to be the biggest beneficiary. When rates move up, you start to see other sectors outperform. This rotation makes positioning in the portfolios difficult; especially when there is no clear view from the market on interest rates.

Our views have not changed from the 2nd quarter and we continue to watch three main things: fiscal policy, monetary policy and interest rates. As long as we have fiscal stimulus and accommodative monetary policy, we could see the market continue to make new highs. However, the market doesn’t always go up in a straight line, and rates will not be low forever. Increased volatility is likely as we see the markets views and perceptions on these catalysts change and/or evolve.

Please see below for further detailed analysis and chart references. If you have any questions or would like to discuss anything mentioned, please do not hesitate to reach out. We appreciate each one of you and hope 2021 has been good to you thus far. Rounding out the last quarter of this year we look forward to seeing and talking to you soon.

All the best,
Syntal Investment Team

Major Markets


S&P 500 ETF (US Market) – SPY

Commentary: The S&P 500 continues to lead the major markets in performance year to date. The long-term momentum in the S&P 500 continued with Financials, Technology and Industrials leading the way.. The S&P 500 also pulled away from the international indexes over the third quarter. 

MSCI EAFE ETF (Developed International Market) – EFA


Commentary: The EAFE Index underperformed the S&P 500 in the third quarter, and International markets continue to underperform US markets YTD. 

MSCI Emerging Markets ETF (Emerging Markets) – EEM

Commentary: Emerging market’s 3rd quarter performance was the worst of the three indexes. Some of this underperformance is attributable to the new delta variant (COVID) being more of a concern but also due to the commodity markets not doing well for the quarter. 

MSCI ACWI ETF (Global Market) – ACWI

Commentary: The ACWI is a global market ETF that is a combination of US, Developed International, and Emerging Markets. This combined index performance is being driven by US Markets. 

Market Performance

The best performing market for the 3rd quarter was the S&P 500, with ACWI in second, MSCI EAFE in third and MSCI Emerging Markets a distant 4th.

US Sector Performance

The best performing US sector for the 3rd quarter was Financials, with Technology coming in second and Real Estate coming in third. Full US sector performance for the quarter below.

US Factor Performance

The best performing factor for the 3rd quarter was Momentum (MTUM), followed by Dividend Growth (DGRO).

Fixed Income

iShares 20 + Years Treasury Bond (Long Term Bonds) – TLT

Commentary: The 3rd quarter was relatively flat from the start to the end but had some pretty decent volatility . As a reminder, bond prices move inversely to rates. 

iShares Core US Aggregate Bond (Bonds) – AGG

Commentary: After a negative second quarter, the core bond index was relatively flat in the third. Most of the negative move came at the end of September when rates started moving up. 

iShares 1-3 Year Treasury Bond (Short Term Bonds) – SHY

Commentary: Short term bonds were relatively flat for the quarter, and there was not a lot of movement in short term rates either. 

iShares National Muni Bond ETF (Municipal Bonds) – MUB

Commentary: Municipal bonds move inversely of rates as well as you can see with the same trend over the quarter. 

Factors in Portfolio or of Interest

iShares MSCI USA Value Factor ETF (Value) – VLUE

Commentary: We have had an opportunistic position in VLUE since the beginning of 2021. The first quarter saw significant outperformance, but VLUE had a harder time in the third quarter. As noted above in the bar chart, it was the worst performing factor for the third quarter. However, the first quarter outperformance still puts VLUE as the top factor YTD. We are closely watching this position and will move out of it if we see further weakness. 

iShares MSCI USA Momentum Factor ETF (Momentum) – MTUM

Commentary: Momentum had a positive 3rd quarter. The MTUM ETF is in our strategic portfolio, and we look for momentum in Syntal Global Equity Momentum as well. This factor tends to influence our performance in the overall portfolio.

iShares Core Dividend Growth ETF (Dividend) – DGRO

Commentary: We own DGRO in our strategic portfolio, and we also have the Syntal Dividend Growth strategy that tracks and looks to outperform the ETF. We believe fixed income yields will continue to be low so we have added dividend factor exposure to increase the cash flow while participating in the equity market. 

Sectors in Portfolio or of Interest

Spider Fund Energy ETF (Energy) – XLE

Commentary: The performance year to date for energy has been spectacular.However, energy exhibited a lackluster performance for the 3rd quarter, with most of the return coming at the end. On a side note, this positive trend has continued so far in the 4th quarter. 

Spider Fund Technology (Technology) – XLK

Commentary: Technology has been the best performing sector over the past couple of yearswith low-interest rates providing a tailwind. This sector was doing well for most of the 3rd quarter and fell pretty hard towards the end. We watch this sector heavily in our momentum strategy and look to adjust our exposure accordingly. 

Important Disclosure Information : 

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Syntal Capital Partners, LLC [“Syntal]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Syntal. Please remember to contact Syntal, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Syntal is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Syntal’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.syntal.com. Please Note: IF you are a Syntal client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian. Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Syntal account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Syntal accounts; and, (3) a description of each comparative benchmark/index is available upon request.