Our eight minute video summarizing the information below is immediately below this text.
Hard to find anything wrong with the market’s Q4 2020 results! Awesome quarter. All four major categories of stocks - US (Russell 3000) (+14.7%), Int’l (+15.9%), Emerging Markets (19.7%) and Global Real Estate (+12.6%) were up double digit percentage for the quarter. The market liked that neither political party held a firm grip therefore little would get done except where they may be able to spend money on infrastructure which would help business.
Annual results are also very good with the exception of Global Real Estate. Understandably was down given Covid causing some companies use office space less.
Interested in drilling down? - Find the full Q4 Market Review document here. It’s also available as a slideshow at the bottom of this page.
Specific to our approach; we tilt toward positive long term market behavior - in Q4 small cap value stocks were up 33% vs. large cap growth +11%. So our clients enjoyed some enhanced performance.
Therefore with that long term behavior in place strongly in Q4, OWA Models performed very well last quarter and annually. Our clients experienced results exceeding our model reporting because of strategically timed rebalancing we performed in March and June, taking advantage of the “Pandemic Plunge”. The model results assume periodic rebalancing - every 6 months and is not set-up to specific timing on specific days - so they do not reflect that strategic rebalance timing. The two funds which we moved into in mid/late March and then sold some in June - rose 50% during the bounce back from the “Plunge”.
Most clients earned between 7% and 17% for the 4th quarter depending on exposure to stocks. That’s a very good quarter! Small stocks were particularly “hot” in Q4; up around 30%. Our clients have a slightly enhanced exposure to small & value stocks.
For the entire year of 2020, model results ranged from 10 to 12% - interestingly “flat” across the range of 40-100% exposure to stock. Not to be repetitive, most of clients did a little better than reported by the models because of strategically timed rebalancing during the “Pandemic Plunge”.
Important note for all clients but especially those in retirement with conservative portfolios. One of the bond funds we employ not only provides stability like all bonds, it also grows with inflation, ticker DIPSX. It uses a special type of U.S. Government bond called “TIPS”. TIPS = Treasury Inflation Protected Security. DIPSX had a return of 11.65% in 2020. US bond market in general was up 7.5% in 2020 (which was an excellent year for bonds). The “Model 55” meaning 55% stock has about 8% of your money in DIPSX. Excellent results and love that DIPSX performance. It moves very little day to day (stability) and in 2020 has a great return as if it were a stock fund! Gotta love that!
You can dive into more details into O’Reilly Wealth Advisor Models performance at our 2-page performance summary here.
Also note that our live broadcast of Q4 results will be Jan. 14, Thursday, at 12:30 p.m. and requires pre-registration to participate. Up until Jan. 14, when you arrive at our website, a pop-up window encourages you to register to watch the webinar. You can also go to this link to register.
