Q3 2012Putnam Perspectives

Capital Markets Outlook

Jefrey L. Knight, CFA
HeadofGlobalAssetAllocation
Key takeaways

Investors must assess the implications of near-zero interest rates.

Our investment stance remains pro-risk, although less so than at the start of 2012.

Politics, and geopolitics, will draw investor attention over the rest of this year.
Putnams outlook
Asset class Underweight Small underweight Neutral Small overweight Overweight
EQUITY l
U.S. large cap l
U.S. small cap l
U.S. value l
U.S. growth l
Europe l
Japan l
Emerging markets l
FIXED INCOME l
U.S. government l
U.S. tax exempt l
U.S. investment-grade corporates l
U.S. mortgage-backed l
U.S. foating-rate bank loans l
U.S. high yield l
Non-U.S. developed country l
Emerging markets l
COMMODITIES l
CASH l
CURRENCY
Dollar/yen Favor dollar
Dollar/euro Favor dollar
Dollar/pound Favor dollar
2
Q3 2012|Capital Markets Outlook
Investment themes
Investors must assess the implications of
near-zero interest rates
InlastquartersCapital Markets Outlook,wenotedthat
inthecontextofageneralizedrallyforriskassets,the
behavioroftwoassetclasses,U.S.investment-grade
bondsandSpanishequities,didnotseemtoft.Ifoverall
marketriskshadbeentrulyabating,onewouldhave
expectedworseperformancefromfight-to-safetyassets
likeTreasuriesandbetterperformancefromperipheral
stockmarkets.Wesuggestedthattheresultsofthesetwo
assetclasseswereremindersthatriskswerestillpresent.
Asitturnedout,thesetwoassetstellthestoryforthe
secondquarteraswell.Spanishstockscontinuedtheir
slide,fallingbydouble-digitpercentagesinthecontext
ofanotherepisodeoffearaboutEuropeingeneraland
Spanishbanksinparticular.MeanwhileTreasurybonds
and,moregenerally,high-qualitybondsaroundtheworld
(seeFigure1)sawbreathtakingdeclinesinyieldsthathave
leftinterestratesatornearrecordlowlevels.Notonlydid
longer-termbondyieldsfall,butcentralbanksinEurope,
Denmark,Australia,andChinaeachrecentlyreducedtheir
already-lowpolicyratesaswell,whiletheBankofEngland
andtheU.S.FederalReserve(Fed)alsotookstepstoease
monetarypolicy.
Asthesecondhalfof2012begins,onethingisclear:
Investorsneedtoconsiderthemeaningofanear-zero
interest-rateenvironmentforinvestmentstrategy.
Following,webriefyreviewfourimplications.
First,abuy-and-holdstrategycannotexpecttoaccruereal
wealthbyinvestingininstrumentsthatyieldessentially
nothing.Infact,lookingworldwide,veryfewcountries
todayoferfve-yearbondyieldsthatareashighastheir
prevailinginfationrates.Withoutsteepdeclinesininfa-
tionconditions,therefore,holdersoffve-yearbondswill
suferalossinpurchasingpowerbyinvestinguntilmaturity.
Thesebondsareattractiveinaportfoliocontextbecause
theyarestable,andbecausetheyprovidepowerfuldiver-
sifcationtoriskyassetswhendefationriskispresent.But
themagnifcentreturnsthatbondinvestorshaveenjoyed
overthepastseveraldecadeswillalmostcertainlynot
continue.Toproftfromfxed-incomeinvestinginthefuture
willrequireverydiferentinvestmentstrategiesacrossthe
opportunitysetofbonds,strategiesthatrelyonrisksother
thandurationasthedominantidentiferofreturn.
Figure 1. A multi-decade rally has lowered bond yields to historic levels.
10-year government bond yields (19692012)
0
5
10
15
20%
Japan
Germany
U.K.
U.S.
Canada
Australia
12/69 6/12 12/79 12/89 12/99 12/09
Source:Datastream.Pastperformanceisnotindicativeoffutureresults.
The magnificent returns that bond investors
have enjoyed over the past several decades
will almost certainly not continue.
PUTNAM I NVESTMENTS|putnam.com
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Alsoattheshortendoftheyieldcurve,lowratesare
troublesome(seeFigure2),mostlybecausetheyreveal
thatmonetarypolicyfexibilityisnowconstrainedrelative
torecenthistory.Whenthecreditcrisisbeganin2007,the
federalfundsratestoodat5.25%,givingtheFedample
capacitytoreduceborrowingcosts.Crisisconditions
todayobviouslyrequirediferentmeasureswhoseefec-
tivenessisunclearatbest.
Lowrateshavedramaticallyimprovedrelativevalue
metricsforstocks.Whileequitiesdonotappeartobe
pricedatbargainlevelsinabsoluteterms,theyarepriced
atveryattractivelevelsrelativetobonds.Thisisconsistent
withaworldinwhichdefationhastheupperhand,but
shoulddefationarypressuresabateevenalittle,equi-
tiescouldprovidedramaticoutperformancerelativeto
interest-rate-sensitivebonds.
Finally,lowratessuggestanopportunitythatisboth
obviousand,tosome,cringeworthy:Theseareattractive
timesforinvestmentleverage.Whetherinvestorsview
thisopportunityintermsofthefnancialfexibilitythat
companieshavetoachieveafordablefnancing,orasan
advantagetoincorporatedirectlyintheirowninvestment
strategy,leverageisatoolthat,usedproperly,canbeneft
fromverylowinterestrates.
Our investment stance remains pro-risk,
although less so than at the start of 2012
Wearelessbullishonequitiesthanwewereatthebegin-
ningofthisyear.ItisworthnotingthattheS&P500gained
morethan9%inthefrsthalfoftheyear,atrajectorybetter
thanitshistoricalaverage.Evenso,atthemidwaypoint
of2012,wehavenotturnedbearish.However,forthree
reasons,wehavebecomelesssupportiveofoutrightdirec-
tionalriskportfolioexposuresthatbeneftfrommarket
directioninanypartoftheworld,eventheUnitedStates.
First,wehaveseensentimentforequities,acontrary
indicator,movefromfeartoreasonablecalm.Certainly,
whileinvestorsremainfarfromebullientaboutstocks,as
measuredbytheVIX,theyhavecheeredupagreatdeal
overthepastninemonths.
Second,wehaveseentroublesomedevelopmentsonthe
earningsfront.Mostimportantly,thepaceofeconomic
growthseemstobeindangerofstalling.Figure3shows
recentdataforpurchasingmanagerssurveysaroundthe
world.Forthesedata,alevelabove50suggestseconomic
expansion,andalevelbelow50suggestsaslowdown.We
notethatoneyearago,only23%ofthesesurveyswere
belowthiskeylevel,whiletoday77%revealeconomic
contraction.Whiletheabsolutelevelsofmostofthese
surveysremainclosetotheneutrallevel,itisnevertheless
quiteobviousthattheglobaleconomyhasdecelerated
recently.
Leverage is a tool that, used properly, can
benefit from very low interest rates.
Figure 2. Even amid economic recovery, the U.S. yield curve has fattened.
U.S. Treasury yield curve
-1
0
1
2
3
4
5
6/30/12
12/31/11
12/31/10
30 yrs 10 yrs 5 yrs 3 yrs 2 yrs 12 mos 6 mos 3 mos 1 mo
Source:Bloomberg.
4
Q3 2012|Capital Markets Outlook
Figure 3. Global business activity has deteriorated
in mid 2012.
Global Purchasing Managers Index (PMI)
6/12 5/12 3/12 12/11 6/11
World 48.9% 50.6% 51.1% 50.5% 52.3%
United States 49.7 53.5 53.4 53.1 55.8
European Union 45.1 45.1 47.7 46.9 52.0
United Kingdom 48.6 45.9 51.9 49.7 51.4
Japan 49.9 50.7 51.1 50.2 50.7
Australia 47.2 42.4 49.5 50.2 52.9
Canada 49.0 60.5 63.5 63.5 59.9
Germany 45.0 45.2 48.4 48.4 54.6
France 45.2 44.7 46.7 48.9 52.5
Italy 44.6 44.8 47.9 44.3 49.8
Spain 41.1 42.0 44.5 43.7 47.3
China 50.2 50.4 53.1 50.3 50.9
India 55.0 54.8 54.7 54.2 55.3
Brazil 48.5 49.3 51.1 49.1 49.0
Russia 51.0 53.2 50.8 51.6 50.6
% Contracting* 77% 54% 38% 46% 23%
1Onlyindividualcountries(i.e.,notaggregateregions)usedinthis
calculation.
Sources:Bloomberg,PutnamGlobalAssetAllocation.Valuesabove50
representexpansionandbelow50representcontraction.
Finally,fromaseasonalperspective,summerandearlyfall
havenotbeenkindtoequities.Lastyear,forexample,the
S&P500delivereddouble-digitnegativereturnsforthe
thirdquarter.
Withconditionsdeterioratingamidapositiveoverallrisk
environment,wearedrawntoassetsshowingstabilityand
resilience,andcreditmarketsremainthebestexample.
High-yieldbonds,forexample,havedeliveredstrong
returnsonayear-to-datebasis,andoferednoteworthy
stabilityduringavolatilesecondquarter.Wecontinueto
favoranoverweighttothehigh-yieldsector.Secondarily,
withinstocks,wepreferlower-riskstablecompanieswith
lessbetasensitivity.
Politics, and geopolitics, will draw investor
attention over the rest of this year
Theyear2012is,ofcourse,apresidentialelectionyearin
theUnitedStates,anditappearsthatthevotewillbeclose.
Itisalsoclearthatthecampaignswillbeverywellfnanced,
soweexpecttheelectionwillbeasourceofconstant
publicityforthechallengesfacingtheUnitedStates,such
asunemployment,healthcare,andsovereignindebted-
ness.Thiswillnotbeacheerfulprocess.
Moreimportantly,wedonotexpectmuchfromgovern-
mentpolicywhilethecampaignisbeingcontested.This
isakeyissueforinvestors,becauseunlesscurrentlawis
altered,asignifcantfscalcontraction,referredtointhe
pressasthefscalclif,willtakeplacein2013.Thecombi-
nationoftaxincreasesandspendingcutsalreadyslated
wouldresultinaheadwindworthseveralpercentage
pointsofGDP.Atthecurrentpaceofeconomicexpansion,
themagnitudeoffscalcontractionwouldlikelymovethe
U.S.economyintorecession.Importantly,investorsdo
notexpectthiscontractiontohitwithfullforce.Weagree.
Weexpectactionstoavoidasuddencontractionofthis
magnitude,buttheprocessbywhichtheseactionsoccuris
likelytobeslowandugly.
Finally,investorscannotignoregeopoliticalriskinthe
secondhalfofthisyear.Irancontinuestofaceeconomic
sanctionsbecauseofitsnuclearprogram,andtensions
intheMiddleEast,givenviolentpoliticalconfictinSyria
andconstitutionaluncertaintyinEgypt,couldeasilyupset
marketsincomingmonths.
Asset class views
Equity
U.S.equityInarepeatperformanceofthepasttwoyears,
U.S.equitiesfollowedastrongfrstquarterbyretreating
onmacroconcernsinthesecondquarter.Thecatalystthis
timewasevidenceofslowinggrowtharoundtheworld.In
theUnitedStates,itsuggestedthatawarmwintermost
likelyacceleratedsomeactivityearlyintheyear,which
provedtobeunsustainable.
We are drawn to assets showing stability
and resilience, and credit markets remain
the best example.
The election will be a source of constant
publicity for the challenges facing the
United States.
PUTNAM I NVESTMENTS|putnam.com
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Europescrisishasgeneratedafairamountofmacrocontro-
versythatafectsanyU.S.industrywithexposuretoglobal
growth.Examplesincludeindustrials,materials,andfnan-
cials.Aswithmostmacro-drivenmarkets,inefcienciesare
buildingthatcreateopportunitiesforlong-terminvestors.
WecontinuetobelieveU.S.stocksaretradingatanattrac-
tiveentrypoint.Ourresearchindicatesthatwithaforward
P/Ebelow13,stockvaluationsareinthebottom20%ofall
historicalobservations,meaningstockshavebeenmore
expensiveroughly80%ofthetime.Therelativecasefor
equitiesisevenstronger,inourview.Atroughly1.5%,the
yieldon10-yearTreasurybondsisnotonlylessthanthat
ofmanydividend-payingstocks,butcarriesagreatdeal
ofinterest-rateriskbecausethereisnowsolittleincome
tobuferachangeinprice.Investorsmustlookbacktoa
periodbefore1960tofndasimilaranomalybetweenthe
yieldsonstocksandbonds.
Atthispointintheexpansion,wearebeginningtosee
adecelerationinearningsgrowthforU.S.companies.
Historically,thisinfectionpointhassignaledearnings
resultswillbecomemoredisparategoingforwarda
morefavorableenvironmentforrigorouslyfundamental
stockpickers.However,anyslowdowninearningsgrowth
shouldbeviewedinthecontextofaremarkableperiod
forU.S.profts,including15%earningsgrowthin2011and
recordlevelsofearningspershare.
Non-U.S.equityNon-U.S.equitymarketsstruggled
throughmuchofthesecondquarterasmacroeconomic
fearsoverwhelmedtheglobalinvestmentstage.With
anxietyfaringupoverapossibleGreekexitfromtheeuro-
zoneandtroubledrealestatemarketsinSpainleadingtoa
government-ledbailout,developedandemerging-market
stocksfellindiscriminatelythroughmostoftheperiod.
Bytheendofthequarter,however,theEuropeansummit
oferedevidencethatpolicymakersareabletotake
positivestepstowardaresolutionoftheeurozonedebt
crisis,despiteoccasionalboutsofpoliticalbrinkmanship.
Althoughacomprehensiveplanforeurozonestabilitymay
notemergeinthenearterm,boldermovestowardfscal
unionmaybringmoreinvestorsbacktoEuropeanequities.
IncontrasttoEuropesdebt-beleaguereddrama,Japan
harboredaclearersetofpositivedevelopments.Itappears,
forexample,thattheJapanesegovernmentandtheBank
ofJapanaremoreseriousabouttryingtopreventtheyen
fromstrengtheningsignifcantlyfurther,whichwouldbean
importanttailwindforexport-focusedcompanies.
IntheUnitedKingdom,largeandliquidcompanieswith
strongmanagementandshareholder-friendlygovernance
structuresmayoferarelativesafehavenfornon-U.S.
equityinvestorsinthecomingquarter.Althoughthe
UnitedKingdomreliessubstantiallyonthehealthofits
Europeantradingpartners,selectdividend-payingU.K.
stocksmayberesilienttofurtherspikesineurozone-
centeredvolatility.
Amongemergingmarkets,Chinasgrowthdisappointed
duetoaslowdownininfrastructurebuilding.Insome
respects,thisaspectoftheslowdownisinevitablegiven
thescaleofChinasbuildoutofitsinfrastructureoverthe
past10years.Unsurprisingly,thisslowdownweighedon
thegrowthprospectsofavarietyofcountriesandcompa-
niesaroundtheworld.
Fixed income
U.S.fxedincomeAfteranencouragingstartto2012,
investorsriskappetitesdisappearedinthesecondquarter.
So-calledspreadsectorsofthebondmarketswidened
whileU.S.Treasuryrates,whichmoveintheoppositedirec-
tionofprices,felltorecordlows.ThesituationinEurope
wasoneofthemainconcernsweighingoninvestors
confdenceduringthequarter.AlthoughGreecesuccess-
fullyrestructureditsdebtearlierintheyear,uncertainty
surroundeditsJuneelections,whichhighlightedquestions
aboutGreecescommitmenttoremainingintheEuropean
Union.Meanwhile,economicdataintheUnitedStates
cameinbelowmanyanalystsestimates,suggestingthat
theunusuallywarmwinterhadinfatedsomeofthemore
positivedatareportedinthefrstquarter.
We continue to believe U.S. stocks are
trading at an attractive entry point.
Bolder moves toward fiscal union may bring
more investors back to European equities.
6
Q3 2012|Capital Markets Outlook
Despitetheuncertainmacroeconomicenvironment,we
continuetobelievethatastrategythatreliesonrates
decliningfurthertodrivereturnsisariskyproposition.This
isparticularlytruegiventheelevatedrolecentralbank
demandhasbeenplayingintodaysmarket.TheFed,
throughtworoundsofquantitativeeasingandaprogram
calledOperationTwist,whichwasrecentlyextendedfor
anothersixmonths,hasbeenbuyinglargequantitiesof
intermediate-andlong-termTreasuries,removingsomeof
thesupplyfromthemarketandhelpingtodriverateseven
lower.Interestrateswouldnotneedtoincreasemuchin
orderforinvestorstostartseeinglosses.
Spreadsectorscontinuetoappearattractive,particu-
larlynon-agencyresidentialmortgage-backedsecurities
(RMBS)andhigh-yieldcorporatebonds.Webelieve
non-agencyRMBShaveheldtheirgroundbetteramid
anincreasinglyuncertainmacroeconomicenvironment
becausethemajorheadwindstotheassetclasshavebeen
aknownquantityforsolong.
Thefundamentalsinthehigh-yieldmarketremainvery
attractive,inourview,withlowdefaultratesandhigher-
than-averagespreads.Inanuncertainenvironment,
corporationsmaybealittlemoreconservativewith
theirplanstoexpand,maykeepalittlemorecashonthe
balancesheets,andmaybealittlemorecautiouswiththeir
useofleverage.
U.S.taxexemptOverallcreditqualityacrossthemunicipal
bondmarketremainsgenerallysoundandisshowingsigns
ofimprovement.Webelievethatthefscalconditionsof
statesandmunicipalitiesareshowingsignsofstability,
butthatstateswillcontinuetofacefnancialchallenges
astheeconomicrecoveryworkstogainsometraction.
Againstthisbackdrop,essentialservicerevenuebonds
outperformedlocalgeneralobligationbonds,orG.O.s,
year-to-date,andwecontinuetofavorthemgoingforward.
Technicalfactorsinthemarkethavebeenpositivestrong
reinvestmentofcoupons,calls,etc.,havebeengreaterthan
refunding-dominatedsupply.Taxreceiptsarebeginning
toincrease,albeitslowly,andwebelieveactualdefaults
willremainrelativelylowfortheremainderof2012,but
wewillnotbesurprisedbyanuptickinlocalG.O.s(e.g.,
Stockton).Ourprimaryconcernsremainfocusedonthe
broadeconomyandCongresssplanstoreducethedefcit.
Broad-basedtaxreform,achangeinthetaxstatusof
municipalbonds,orsignifcantcutsinstatefundingall
wouldhaveconsequencesforthemunicipalbondmarket.
Non-U.S.fxedincomeWehavereducedriskproflesin
generalinrecentmonths,asthemostpressingquestions,
forusandforinvestorsbroadly,arewhetherthesitua-
tioninEuropedeterioratesandwhethertheeconomyin
theUnitedStatescanfnditsfooting.Centralbankshave
limitedoptionsfortakingmoreaccommodativestances
withinterestratesaslowastheyare,soitisnotclearhow
muchfurtherinfuencemonetarypolicywillhaveonglobal
economies.Thatsaid,webelievethatmanyareasofthe
bondmarketshavealreadypricedinratherbleakeconomic
conditions,soslowandsteadygrowthparticularlyinthe
UnitedStatesmaybeenoughtohelpriskassetsrally.
Commodities
Commoditiesremainunattractive,withseveralfactors
workingagainsttheirattractivenessasriskyassets.
First,thedecelerationintheglobaleconomysuggests
thatcommoditydemandwillbeweaker.Second,the
issueofnegativerollyieldcontinuestoimposeacost
oncommodityinvestorsthatreducesreturns.Third,the
recentstrengthoftheU.S.dollarhasbeencorrelatedwith
weakeningcommodityprices,andweremainfavorableon
thedollar.Finally,thehighvolatilityofcommodities,readily
apparentduringthesecondquarter,meansthatcommodi-
tiesmustoferhigherreturnsthanotherassetclassesin
ordertocompensateinvestors.Wedoubtthatsuchhigh
returnsareinstore.Somecommodityexposuremakes
senseasahedgeagainstgeopoliticalrisks,butotherwise
wefavoranunderweight.
Currency
Withaslowdowninglobalgrowthcoupledwiththe
reemergenceoftheEuropeandebtcrisisasaprimary
driverofassetreturns,wefavortheU.S.dollaronthebasis
ofageneralizedfighttoqualityandbecauseglobalyields
haveconvergedtoU.S.levels.Shortofmajorglobalpolicy
response,theU.S.dollarshouldremainsupportedby
continuedfighttoqualitytradesandtechnicalindicators.
Wefavorashortpositionontheeuro,whichshould
continuetosuferasinvestorsshedEuropeanasset
holdingsduetotheongoingdebtcrisis.Theunintended
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The Barclays Government Bond Index is an unmanaged index of U.S. Treasury and
government agency bonds.
The Barclays Municipal Bond Index is an unmanaged index of long-term fxed-rate
investment-grade tax-exempt bonds. You cannot invest directly in an index.
The Barclays 10-Year U.S. Treasury Bellwether Index is an unmanaged index of U.S.
Treasury bonds with 10 years maturity.
The Barclays U.S. Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fxed-income securities.
The Barclays U.S. Mortgage-Backed Securities (MBS) Index covers agency
mortgage-backed pass-through securities (both fxed-rate and hybrid ARM) issued by
Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC).
The BofA Merrill Lynch U.S. 3-Month Treasury Bill Index consists of U.S. Treasury Bills
maturing in 90 days.
The Citigroup Non-U.S. World Government Bond Index is an unmanaged index
generally considered to be representative of the world bond market excluding the
United States.
The Dow Jones Industrial Average Index (DJIA) is an unmanaged index composed of
30 blue-chip stocks whose one binding similarity is their hugeness each has sales per
year that exceed $7 bil lion. The DJIA has been price-weighted since its inception on May
26, 1896, refects large-cap companies representative of U.S. industry, and historically
has moved in tandem with other major market indexes such as the S&P 500.
The S&P GSCI is a composite index of commodity sector returns that represents a
broadly diversifed, unleveraged, long-only position in commodity futures.
The JPMorgan Developed High Yield Index is an unmanaged index of high-yield fxed-
income securities issued in developed countries. You cannot invest directly in an index.
The JPMorgan Emerging Markets Global Diversifed Index is composed of U.S.
dollar-denominated Brady bonds, eurobonds, traded loans, and local market debt
instruments issued by sovereign and quasi-sovereign entities.
The MSCI EAFE Index is an unmanaged list of equity securities from Europe and
Australasia, with all values expressed in U.S. dollars.
The MSCI Emerging Markets Index is a free-foat-adjusted market-capitalization-
weighted index that is designed to measure equity market performance in the global
emerging markets.
The MSCI Europe Index is an unmanaged list of equity securities originating in any of 15
European countries, with all values expressed in U.S. dollars.
The MSCI World Index is an unmanaged list of securities from developed and emerging
markets, with all values expressed in U.S. dollars.
The Nasdaq Composite Index is a widely recognized, market-capitalization-weighted
index that is designed to represent the performance of Nasdaq securities and includes
over 3,000 stocks.
The Russell 1000 Index is an unmanaged index of the 1,000 largest U.S. companies.
The Russell 2000 Index is an unmanaged list of common stocks that is frequently used
as a general performance measure of U.S. stocks of small and/or midsize companies.
The S&P/LSTA Leveraged Loan Index (LLI) is an unmanaged index of U.S. leveraged
loans.
The S&P 500 Index is an unmanaged list of common stocks that is frequently used as a
general measure of U.S. stock market performance.
The Tokyo Stock Exchange Index (TOPIX) is a market-capitalization-weighted index of
over 1,100 stocks traded in the Japanese market.
consequenceoftheEuropeanCentralBanks(ECB)two
Long-TermRefnancingOperations(LTRO)hasbeen
increasedinterdependenceofdomesticbankstopurchase
sovereigndebtasforeignersdisinvestholdings.Thishas
limitedcreditextension,causingweakereconomicdata,
continuedpressureonsovereignbondmarkets.
TheBritishpoundsterlingisattractiveversustheeuro
ratherthanthedollar,asthepoundhasseensafe-haven
fows.WearemodestlynegativeontheJapaneseyen.At
recentlevels,Japaneseofcialsarevoicingconcernsabout
yenstrength.
MARKET TRENDS
Index name (returns in USD) 2Q12
12months
ended
6/30/12
EQUITY INDEXES
Dow Jones Industrial Average -1.85% 6.63%
S&P 500 -2.75 5.45
Nasdaq Composite -5.06 5.82
MSCI World (ND) -5.07 -4.98
MSCI EAFE (ND) -7.13 -13.83
MSCI Europe (ND) -7.47 -16.48
MSCI Emerging Markets (ND) -8.89 -15.95
Tokyo Topix -6.87 -3.39
Russell 1000 -3.12 4.37
Russell 2000 -3.47 -2.08
FIXED INCOME INDEXES
Barclays U.S. Aggregate Bond 2.06% 7.47%
Barclays 10-Year Bellwether 5.78 17.40
Barclays Government Bond 2.63 8.32
Barclays MBS 1.08 4.97
Barclays Municipal Bond 1.88 9.90
BofA ML 91-day T-bill 0.03 0.06
CG World Government Bond ex-U.S. 0.20 0.44
JPMorgan Developed High Yield 1.77 8.43
JPMorgan Emerging Markets Global
Diversifed Index 2.76 9.77
S&P LSTA Loan 0.75 3.43
COMMODITIES
S&P GSCI -12.38% -10.74%
Itisnotpossibletoinvestdirectlyinanindex.Pastperformanceisnot
indicativeoffutureresults.
NOTES
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