3rd QUARTER MARKET COMMENTARY

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The third quarter was a bit of a roller coaster ride in the markets with the flight to safety driving market returns. Bonds saw the stronger relative returns across the board for the quarter as investors sought safety amid the growing global tensions. Over the year-to-date period, however, equities continued their winning streak in the developed markets.

US equities provided the strongest returns for the quarter and year-to-date at 1.7% and 20.6% respectively. In local currency terms, the international developed markets marginally outperformed the US markets for the quarter with a return of 1.8%. But the move in the dollar created a large headwind wiping almost 3% from the return for the quarter.

The demand for safety saw yields plummet in longer term bonds, lifting the return of long-term treasuries to 7.9% for the quarter and an impressive 19.8% year-to-date. Corporate bonds faired reasonably well over the quarter and maintained their year-to-date strength with returns above 10%.

US REITs benefited from the fall in rates and saw a return of 7.7% for the quarter, lifting year- to-date returns to an impressive 28.5% making it the strongest performing asset class year-to-date.

Market uncertainty helped lift gold to a return of 3.8% for the quarter and 14.2% for the year as people sought the safety of the yellow metal.

NERT Model Allocation – Choices for every investor

The NERT model allocations are designed to help participants build diversified allocations to capture the major market sectors and a variety of management styles. They are offered to aid typical participant needs for diversified, risk-adjusted allocations. NERT rebalances allocations on a regular basis attempting to keep a consistent risk and asset posture. The allocations will maintain some exposure even in underperforming classes. Diversification, by definition, means not all assets can have positive performance every period. The NERT model allocations are designed to allow any investor to participate in proven ways to reduce risk and improve returns over longer periods.

3rd  QTR                 1YR                 3YRS                         5YRS

Stable Income                                        1.14%                 5.22%                    3.42%                        3.14%

Conservative Income                            3.37%                  5.13%                   4.95%                         4.17%

Traditional Pension                               5.40%                  4.08%                   7.60%                         5.92%

Equity Oriented                                      7.42%                  2.98%                   8.72%                        6.34%