So long as one did not carry too substantial an amount of interest rate risk in portfolios, markets provided a solid foundation for generally positive returns over the past quarter and year. While fixed income returns have yet to register the now higher yields on offer (recall that yields up = price down in bonds), global stocks took off from the October bottom.

“Despite all that” is a common refrain when discussing stock performance over the past year. Though they fell behind in May, developed-market stocks nearly matched the performance of U.S. stocks. Emerging-market equities languished over the trailing twelve months.

In the States, Large-Cap Growth stocks once again took the lead last quarter, adding to substantially stronger gains for the prior year, during which time Growth generally outperformed Value across all sizes of stocks. Meantime, Value turned in a better quarter abroad, while coming in close to Growth over the prior twelve months.

Turning to fixed income, rates have proved remarkably volatile so far in 2023 as investors on several occasions seem to have been caught wrong-footed relative to evolving macroeconomic data and potential shifts in monetary policy. But the general trend was higher, leaving much of the domestic investment-grade bond market in the red for the trailing 3- and 12-month periods. Nonetheless, generally narrower credit spreads helped offset the impact of rising rates on corporate bond returns.

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