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City of Hallandale Beach
DB Plan Update
November 17, 2014
Important Information
All expressions of opinion and predictions in this report are subject to change without notice. This report is not intended to be, nor should it be relied upon in any way as a forecast or guarantee of future events regarding a particular investment or the markets in general.
Economy and Market Review3rd Quarter 2014
Economy and Market ReviewRecap 3rd Quarter 2014
Indexes are not available for direct investment.
• Global equity markets generally experienced negative returns in the third quarter of 2014
• In the U.S., the S&P 500 Index gained 1.13% for the quarter and is up 8.34% for the year
• International markets (as measured by the MSCI All Country World (ex-U.S.) Index) lost 5.27% during the third quarter of 2014 and are flat (0.0%) year to date
– International developed markets (as measured by the MSCI EAFE Index) lost 5.88% for the quarter and are down1.38 % for the year
– International emerging markets (as measured by the MSCI Emerging Markets Index) lost 3.50% for the quarter, but are up 2.43% for the year
• Yields have been relatively flat since the low as investors remained skeptical about faster growth
– The 10-year Treasury yield finished the quarter at 2.49%, down 4 basis points for the quarter
– The 2-year Treasury yield finished the quarter at 0.57%, up 9 basis points for the quarter
Economy and Market Review
Recap 3rd Quarter 2014
• U.S. still appears to be poised for further growth
• Brazil is in a technical recession
• European pessimism is rampant
• U.S. Yields remain low despite U.S. growth
The EconomyTailwinds & Headwinds – Third Quarter
2014
Headwinds
Legislative & Fed action impact
Geopolitical risks
Brazil in technical recession & European pessimism
Duration of the U.S. expansion
Tailwinds
Employment continues improvement
Pent-up consumer demand
ECB plan for bond purchases
Highly accommodative monetary conditions
Economy and Market Review
Outlook for the Future
• Potential for more serious emerging market financial stress
• The U.S. economy is likely past the middle of the expansion
• Rates have to rise…eventually
• Growth in China has likely slowed permanently
Outlook for the Future
Economy and Market Review
Faster U.S. growth could drive higher yields by year end, but the strong economy would likely be offset by global forces driving yields lower. Strong U.S. expansion and removal of Fed accommodation could result in somewhat higher rates and further volatility.
Our forecast for Treasury yields at the end of 2014 is as follows:
– A Federal Funds Rate target of 0% to 0.25%
– A 10-year Treasury Rate of 2.75% to 3.00%
– A 2-year Treasury Rate of 1.00%
Asset Class Review Three Months Ending September 30, 2014
Fixed Income Real EstateU.S. Equity Int’l Equity
Source: Principal Global Investors Returns are annualized. Indices are unmanaged and do not take into account fees, expenses and transaction costs. Indices are not available for direct investment. Past performance is not a reliable indicator of future performance.
Asset Class Review One Year Ending September 30, 2014
Fixed Income Real EstateU.S. Equity Int’l Equity
Source: Principal Global Investors Returns are annualized. Indices are unmanaged and do not take into account fees, expenses and transaction costs. Indices are not available for direct investment. Past performance is not a reliable indicator of future performance.
Asset Class Review Three Years Ending September 30, 2014
Fixed Income Real EstateU.S. Equity Int’l Equity
Source: Principal Global Investors Returns are annualized. Indices are unmanaged and do not take into account fees, expenses and transaction costs. Indices are not available for direct investment. Past performance is not a reliable indicator of future performance.
Asset Class Review Five Years Ending September 30, 2014
Fixed Income Real EstateU.S. Equity Int’l Equity
Source: Principal Global Investors Returns are annualized. Indices are unmanaged and do not take into account fees, expenses and transaction costs. Indices are not available for direct investment. Past performance is not a reliable indicator of future performance.
Asset Class Review Ten Years Ending September 30, 2014
Fixed Income Real EstateU.S. Equity Int’l Equity
Source: Principal Global Investors Returns are annualized. Indices are unmanaged and do not take into account fees, expenses and transaction costs. Indices are not available for direct investment. Past performance is not a reliable indicator of future performance.
January 1, 1999 – December 31, 2013
Past performance is not a reliable indicator of future performance.
Asset Class Performance
. Large-cap growth stocks are represented by the annual total returns of the Russell 1000® Growth Index. Large-cap value stocks are represented by the annual total returns of the Russell 1000 ® Value Index. Mid-cap growth stocks are represented by the annual total returns of the Russell Midcap® Growth Index. Mid-cap value stocks are represented by the annual total returns of the Russell Midcap® Value Index. Small-cap growth stocks are represented by the annual total returns of the Russell 2000® Growth Index. Small-cap value stocks are represented by the annual total returns of the Russell 2000® Value Index. International stocks are represented by the annual total returns of the MSCI EAFE® Index. Emerging stocks are represented by the annual total returns of the MSCI Emerging Index. Core bonds are represented by the annual total returns of the Barclay’s Capital Aggregate Index. High Yield bonds
are represented by the annual total returns of the Barclay’s Capital US High Yield Index. Real Estate securities are represented by the annual total returns of the NAREIT Index. Direct Property is represented by the annual total returns of the NCREIF Open End Property Index. The indexes are unmanaged and do not take transaction charges into consideration. It is not possible to invest directly in an index.
No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values.
General Employee Plan – Target Allocation By Asset Class
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General Employee Plan – Target Allocation By Investment Option
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General Employee Plan – Target Allocation By Investment Option
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General Employee Plan – Asset Allocation By Asset Class
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General Employee Plan – Asset Allocation By Investment Option
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General Employee Plan – Asset Allocation By Investment Option
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General Employee Plan – Asset Allocation By Investment Option
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Investment Option by Style Box
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Investment Option by Style Box
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General Employee Plan Performance – 9/30/2014
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Professional/Management Plan – Target Allocation by Asset Class
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Professional/Management Plan – Target Allocation By Investment Option
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Professional/Management Plan – Target Allocation By Investment Option
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Professional/Management Plan – Asset Allocation by Asset Class
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Professional/Management Plan – Asset Allocation By Investment Option
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Professional/Management Plan – Asset Allocation By Investment Option
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Professional/Management Plan – Asset Allocation By Investment Option
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Investment Option by Style Box
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Investment Option by Style Box
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Professional/Management Plan Performance – 9/30/2014
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