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1st Quarter 2021

It was a strong start to the year for equity markets with optimism about vaccine distribution and the reopening of economies around the world.  The ability to get the global population vaccinated will be a major driver of the speed and success of the economic recovery. As I am writing this commentary, more than 133 million people in the United States have received at least one dose of a vaccine, and every person in the United States age 16 and older is eligible for the Covid-19 vaccine.  While the rollout has had its bumps in the United States, there is optimism about where we are and the progress that will be made in the coming months.  This has provided a tailwind to financial markets.  Globally, countries including Israel, United Kingdom, and Chile have also had success with their vaccine rollouts, but there are still many countries that are struggling such as India and Brazil. Currently, 928 million vaccine doses have been administered worldwide, equal to 12 doses for every 100 people.

For the quarter, value and small-capitalization stocks continued their positive momentum from the end of last year.  This is highlighted in the NERT model allocations Dodge and Cox Fund and Hennessy Focus Fund which were up 15.9% and 13.5% respectively. One negative for investment markets occurred in the bond market. Interest rates moved higher on optimism of global markets reopening, leading many bond prices to decline. Looking ahead, continued support from central banks and governments around the world and resilience in the global vaccine rollout will be major factors in the growth of the global economy and financial markets. If both go well, 2021 could be another solid year for investors.

1ST QTR                          1YR                           3YRS                          5YRS

Stable Income                               -0.20%                             14.02%                     4.48%                        4.44%

Conservative Income                   1.16%                              22.99%                      6.12%                        6.19%

Traditional Pension                      4.56%                              42.54%                     8.94%                        9.39%

Equity Oriented                             6.96%                              55.81%                    9.85%                         10.73%


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 regularly 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 a 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.

As communicated in April 2020, given the current limitations on withdrawals from the Principal U.S. Property Fund, we created model allocations that removed the Principal U.S. Property Fund.  The quarterly and 1-year return for these new allocations is listed above, however, a portion of the allocation remains within the Principal US. Property Account.

Andrew Casteel, CIO, CFP

Acorn Financial Advisory Services, Inc.