Download 1st Half 2016 Newsletter - Harpswell Capital Advisors

First Half 2016
Contents
First Half Performance
Equity markets started the year under pressure which was generally
thought to be driven by concerns over the prospects for a Yuan
1 devaluation from the Chinese Central Bank. The Chinese banks were
Brexit
expected to act in response to the dollar’s escalation however as the
1
Debt & Price Discovery
Fed changed its posture on raising rates, concerns regarding a Yuan
2 devaluation dissipated and the markets moved higher. Domestic
The Ideal Gas Law
Mainstay Municipal Bond Fund 3 equities rallied on the prospects of supportive monetary and fiscal
policies and ended up 3.6% (Russell 3000) on the year (through
8 1H2016). Non-US developed market equities finished the first half of
Angel Investors
10 2016 down 4.4% (MSCI EAFE) and emerging market equities were up
Energy Investments?
6.4%. As interest rates continued to drop, bonds churned out a
12 positive return with longer bonds up 5.3% (Barclays Aggregate) and
Sector Performance
13 shorter bonds (Barclays 1-3month) up 0.1%. Commodities bounced
Flash Report
with the more energy centric GSCI up 9.9% and the Bloomberg
Commodity index up 13.3%.
First Half Performance
1
Brexit
On June 23rd, the United Kingdom
held a non binding nationwide
referendum to decide to
“Remain” or “Leave” the
European Union. The “Leave” side
prevailed which now puts the
UK’s economic future in limbo
and the financial markets
struggling to make sense of what
happens next. Prime Minister
David Cameron had urged the
country to vote “Remain” but was
defeated by 52% to 48% despite
London, Scotland and Northern
Ireland opposed to Brexit. Clearly,
the financial markets were
surprised and rattled by the vote
Continued on page 7
For Harpswell, manager selection and our value tactical tilt proved to
provide a meaningful tailwind for performance while our more
conservative posture on our fixed income (bond) investments
detracted from our performance, relative to benchmarks. Overall,
performance was very solid and we are pleased with returns.
Public Policy, Debt & Price Discovery
We recently came across David Stockman’s report titled Price
Discovery, R.I.P and thought it rhymed well with a notion that we have
been discussing for some time. Harpswell has suggested for over a
year now that the extraordinary monetary (and perhaps soon to be
fiscal policies) have blown us into uncharted waters. The central bank
actions deployed to first resurrect the economy and now support the
market are truly remarkable and beyond the imagination of our most
notable economists (Keynes, Smith….). Stockman explores the result
of these policies in the context of asset prices in his compelling essay.
Continued on page 4
This commentary is prepared by Harpswell Capital Advisors for informational purposes only and is not intended as an offer of solicitation for the purchase or sale of
any security. The information contained herein is neither investment advice nor a legal option. The views expressed are those of Harpswell Capital Advisors as of
the date of publication of this report, and are subject to change at any time due to changes in market or economic conditions. The comments should not be
construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. Harpswell Capital Advisors cannot assure that
the type of investments discussed herein will outperform any other investment strategy in the future, nor can it guarantee that such investments will present the
best or an attractive risk-adjusted investment in the future. Although information has been obtained from and is based upon sources Harpswell Capital Advisors
believes to be reliable, we do not guarantee its accuracy. There are no assurances that any predicted results will actually occur. Past performance is no guarantee
of future results. Registration with the SEC or with any state securities authority does not imply a certain level of skill or training.
1
The Ideal Gas Law, Tom Brady, and cutting your losses.
At Harpswell we thought Tom Brady’s
decision to take a knee after the judicial
process ran its course was a good
illustration of how good business folk cut
their losses, even when they are clearly
right on the merits of their argument. And
in some sense it is a mini-Br(ady)exit.
That said, the Patriots and Tom Brady have
done what they can to create a certain
environment for them to do business this
fall. Had Brady continued his appeal, the
Supreme Court would have decided the
timing of the 4 game suspension. Surely
sitting the first 4 games is much less risky
than sitting 4 playoff games. The Patriots
and Brady also renegotiated his contract
this spring which lowered his base salary
from $9 million in 2016 to $1 million, in
exchange for an up-front payment. So
sitting 4 of 16 games will cost Brady a
quarter of $1 million (or $250K) instead of a
quarter of $9 million ($2.25 million). At
Harpswell we appreciate the planning that
went into this. This is a great example of
minimizing the downside and cutting your
losses even when you are right.
A friend from Buffalo visited recently. At
dinner, I took her wine bottle out of the
fridge, poured a glass, and replaced the
stopper. About 5 minutes later the cork
popped out and wound up on the floor.
Aha I said to the Bills fan, “the Ideal Gas Law
in action! The bottle got warm and the gas
pressure increased!” I got a new cork, re
stoppered the bottle, and put it back in the
fridge to get cold. About 15 minutes later I
got it out to pour another glass, and darn if
the stopper wasn’t sucked into the neck of
the bottle. Aha I again said to the Bills fan,
“the Ideal Gas Law in action! The bottle got
cold and the gas inside shrank!”
And as for Tom Brady’s legacy, we share
some lyrics from Robert Hunter: “Don’t
waste your breath to save your face, when
you have done your best, and even more is
asked of you, let Fate decide the rest”.
I’m not sure that the obvious physical
evidence changed her mind, anymore than
it changed Roger Goodell’s.
The ideal gas law is a good approximation of the behavior of many gases under many
conditions (including a change in temperature). It was first stated by Émile Clapeyron in 1834
as a combination of the empirical Boyle's law, Charles' law and Avogadro's Law.[1] The ideal
gas law is often written as: PV=nRT (via wikedpedia)



P is the pressure of the gas
V is the volume of the gas
n is the amount of substance of gas (in moles)

R is the ideal, or universal, gas constant

T is the temperature of the gas (Kelvin)
NFL officials suggest the “n” changed. The Patriot’s fans suggest the “T” changed.
2
Mainstay High Yield Municipal Bond Fund
When choosing an Investment Advisor, a
number of factors should be considered before
engaging any firm. These factors often include
evaluating the firm’s knowledge and
experience, ability to communicate, business
stability and proven success in managing an
investment program. In addition to Asset
Allocation and manager and/or fund selection,
access and fees typically play an important role
in determining if an investment program has
been successfully managed. Typically, fees are
incurred both at the Advisor and fund levels, so
high fees can significantly impact performance.
fees). We recognize that when our clients
realize lower fees this translates into higher
returns, relative to that paid by other retail
investors.
The example below illustrates an investment
that we utilize for some taxable clients when
appropriate. The investment, Mainstay High
Yield Municipal Bond Fund, seeks a high level
of current income exempt from federal income
taxes; the secondary objective is total return.
The fund invests at least 80% of its assets in
lower quality municipal bonds. This is an area
where we feel fundamental research can
generate alpha (positive returns) for our clients.
At the retail level, the Fund charges .87% while
the fee for the institutional share class is .62%
but has a $5 million minimum which would
eliminate many of our clients. However, due to
our custodial relationship, the minimum has
been waived and our clients benefit from lower
costs. There are many funds that Harpswell
can access that would otherwise be unavailable
or more expensive. Harpswell continuously
looks to find attractive investment
opportunities for our clients.
At Harpswell Advisors, we offer quality service
at attractive fee levels and we always strive to
minimize the fees that our clients pay. While
we use passive (index) investments whenever
appropriate to maximize returns and minimize
costs, there are areas where active
management is most beneficial. Although active
management fees are typically higher, several
of Harpswell’s deep rooted relationships
provide our clients with access to high quality
investments generally available only to larger
investors (and we can sometimes get lower
Not only are the fees lower, but Mainstay has added value as compared to other tax exempt
investments as shown in the chart below.
History (06/30/2016)
MMHIX
Barclays Municipal TR USD
Category (HM)
+/- Barclays Municipal TR USD
+/- Category (HM)
Annual Report Net Expense Ratio
Turnover Ratio
Rank in Category
Fund Category
2011
2012
2013
2014
2015
YTD
12.18
10.70
10.18
1.48
2.00
0.60
154
17.14
6.78
13.82
10.36
3.32
0.60
117
-5.63
-2.55
-5.99
-3.08
0.36
0.62
95
17.80
9.05
13.86
8.75
3.94
0.62
67
5.86
3.30
4.09
2.56
1.78
0.62
31
7.29
4.33
5.86
2.96
1.44
—
—
12
16
37
5
9
13
HM
HM
HM
HM
HM
HM
MMHIX return as of 06/30/2016 Barclays Municipal TR USD return as of 06/30/2016 Category: HM return as of
06/30/2016
3
Debt & Price Discovery (continued from page 1)
What becomes apparent is the fact that
sovereign debt is being priced on the
perception that central banks will run up their
prices (buy aggressively) rather than pricing
being a function of investors’ perceived risks.
Stockman refers to and it is essential for
efficient markets. Currently, central bankers
are buying bonds as a means to drive up prices
(and down yields) forcing investors to reach for
higher risks and higher yields. The central
banks have basically anaesthetized investors to
the signals that denote risk (pain) resulting is a
trend of more and more assets being
accumulated by investors whose risk tolerances
are unlikely to be consistent with the assets
they are holding.
Currently, $11.7 trillion of sovereign debt trades
at a negative yield. This amounts to over a
quarter of all sovereign debt globally. There are
several important repercussions and
implications of this phenomenon that we have
been focused on and feel it is worthy of
discussion here.
The New York Times recently (July 11th)
published an article titled Can We Ignore the
Alarm Bells the Bond Market Is Ringing?. The
Times exclaimed “if the bond market is correctly
predicting the economic path ahead, we should
be terrified”. In the article, Neil Irwin debated
whether the bond market is simply
miscalibrated or telling us something. He
concluded by suggesting “that something is that
we should be worried about the possibility the
world is in a nasty deflationary economic trap
that won’t get better anytime soon.”
First, global central bankers’ actions have
essentially thwarted what is typically an
efficient means of communication for the
capital markets. Assets are typically priced as a
result of supply and demand at various levels
and this process efficiently allocates resources
by aligning prices for assets with the level that
clears the buyers and sellers. If a bond is priced
with too low of an interest rate, it shouldn’t sell
until the rate rises to reflect the risks the buyer
is taking. This “price discovery” is what
The yield curves for Germany, Japan, and Switzerland currently have negative yields for over 15, 20 and
40 years, respectively. Fundamentally, the only reasons a rationale investor would accept negative
4
yields would relate to the notion that their real yields will be positive or the negative yields are a
reasonable price for a safe place to store capital. Either scenario is not positive as the former would
suggest deflation and the latter would reflect a lack of confidence in our financial system. Just as a note,
deflation is a real concern; if it were to emerge, it would then compound the burden associated with a
highly indebted economy.
The proportion and level of debt that trades with negative yields continues to grow. This trend is
concerning as it may be hard for central banks to reverse.
It is worth noting that Italy’s 10 year sovereign debt trades at a much lower rate (1.25%) than that
issued from the US (1.58%). This is truly remarkable given the size of Italy’s banking system ($4.4T) and
the $400B in non-performing loans they have amassed. These figures, relative to GDP, are a good
multiple of the same figures for the United States. In another words, there is no fundamental reason for
Italy’s debt to be cheaper than that in the United States. The European Central Bank, along with front
running investors, are the predominant buyer of Italy’s debt and they are indifferent to prices and
(negative) yields. They have driven bond prices to an extreme never imagined by economists just 5
years ago.
Crazy, A Story of Debt
Grant Williams is another well-regarded economist who is known for thinking outside the box. We
found his recent presentation on debt levels to be particularly interesting (and concerning). Williams
highlights the growth in global debt with a focus on the debt levels that have ballooned just since 2008
(the banking crisis). The link for the video is below and we encourage you to watch the 40 minute
presentation.
https://realvisiontv.com/landing/crazy
Williams shows how global debt has grown immensely since 2008. He also highlights how the debt is
pretty concentrated among the current issuers. He notes that corporations and the consumer have
5
actually paid down debt levels but governments have more than made up the difference. Our concern
with growing government debt is twofold:
1. Artificially low interest rates give a false signal to government officials regarding the level of
debt they can support. Once interest rates return to equilibrium levels, many budgets will be
dominated by debt servicing expenses.
2. Debt essentially pulls economic activity forward. Thus, our past level of economic activity has
been higher than the otherwise equilibrium level and at some point in the future it will be offset
by a corresponding amount (plus interest).
Tell us everything is OK!
So why are equity markets signaling happy days
are here again? The S&P 500 is hitting new alltime highs day-after-day and that certainly
sends a different message than that we hear
from the bond market. We attribute the
record equity levels to a few key observations.
impression of earnings growth and it also drives
up prices.
For the near future, we expect the market to
continue to react positively to more monetary
policies and the prospects of supportive fiscal
policies (helicopter money). Until these policies
prove to be ineffective, markets will likely
continue with their pavlovian reactions to
central bank initiatives with occasional
“hiccups” associated with reality or
unanticipated “events”. We do feel that
eventually, the prospects to policy fatigue are
real and these forms of stimulus will have run
their course.
Stocks are generally valued by discounting the
future cash-flows at a rate that is determined
by interest rates. Therefore, future income is
discounted at a much lower rate and this
justifies a higher valuation for stocks. Also,
investors have been pushed into riskier assets
and this too drives up valuations. Finally,
corporations are buying back record levels of
their own stock and this both gives an
6
Brexit (continued from Page 1)
resulting in a global selloff during the course of several days, followed by a recovery as investors
adopted a wait and see attitude as events unfold although fund outflows in Europe were
significant.
As way of background, David Cameron ultimately decided to put the “Leave” or “Remain”
question to public vote. In a speech in January 2013, he said that he had been under pressure
by MPs (Members of the House of Commons) to deliver a referendum and that
"disillusionment" with the EU was at an "all-time high." So effectively, it was an exercise in
party management and a successful one at that. It played at least some part in securing enough
votes to return the Conservatives into government with a majority. This referendum was not
the result of noble motives but because David Cameron was really worried that he was not
going to get re-elected.
The referendum gained popularity as concerns regarding a number of issues grew over time.
Brexit supporters claimed that the country’s Sovereignty, Immigration policies and cost of EU
membership provided ample justification to withdraw from the EU. More specifically, they
claimed that:
SOVEREIGNTY - Membership in the European Union was undemocratic because the
European Commission, which is not elected, has the monopoly of proposing all EU
legislation. It also has the power to issue regulations which are binding on all member
states.
IMMIGRATION - Britain has given away control of immigration within the EU to the EU
and retains the power only to control non-EU immigration. This has led to huge
disparities where Commonwealth citizens with family in Britain struggle to obtain visas
while EU citizens with little link with the UK can obtain work.
EU COSTS - Britain pays direct ‘membership’ costs of £17.4bn, which equate to an
annual net contribution of £6.7bn and dramatically rising owing to Tony Blair’s
surrender of a sizeable part of the British rebate.
Now that the referendum has passed and
the UK will presumably be leaving the EU,
we know that the effects will be significant
but difficult to quantify. UK political leaders,
including David Cameron and members of
the opposition have resigned, leaving a
political vacuum for the time being. On July
11th, Theresa Mary May replaced Cameron
as Prime Minister of the United Kingdom
and is the Leader of the Conservative Party.
Following her appointment, May faced
immediate pressure from EU leaders to
7
serve formal notice of Britain's withdrawal
(Article 50) and set the clock ticking on a
two-year countdown to its final departure.
During this period, the UK and EU must
negotiate new trade and travel agreements.
As an added complication, Nicola Sturgeon
of Scotland has stated that it was
“democratically unacceptable” for Scotland
to be taken out of the EU against its will and
vowed to hold an independence
referendum in the next two years.
prior month. The equity markets in the UK
stabilized somewhat by month’s end closing
down about 4%. However, given the
uncertainty as the EU exit process unfolds,
the British currency and equity markets are
particularly exposed and will experience
volatility until the implications of the UK
leaving the EU are better understood. At its
July 14th meeting, the Bank of England
voted to hold rates constant but will meet
again on August 4th at which time most of
its policymakers expected to approve a
stimulus package.
An interesting twist to the story lies in the
fact that PM May opposed Brexit and urged
voters to stay in the EU. Since the
referendum is non binding and there is no
deadline for invoking Article 50, there has
been speculation that she may use this as
leverage to negotiate better terms with the
EU and ultimately avoid a Brexit.
The broader implication of the Brexit vote is
the future of the EU itself. Dealing with the
departure of the UK will be a daunting
exercise. However, if other countries such
as France, Italy, which is currently facing a
Banking crisis, or even Greece follow suit,
the viability of the EU could be in doubt and
the effects far worse than what we have
seen to date.
By the end of June, the British pound had
fallen about 9% against the dollar from the
Maine Angels
We feel it is worthwhile to highlight other forms of investing, on occasion, as one can always
learn from examining others’ successes (and failures). Harpswell does not make Angel
Investments, however we do find it to be an interesting institution that is shaping our economy.
Angel investing refers to local individuals get together to pool resources and expertise to invest
in startup firms that have promise for the future. Sometimes investments are made by the
individuals and sometimes the Angels pool their assets and invest collectively. The trend for
angel investing has grown tremendously nationwide over the last decade.
Maine Angels was founded in 2003 to create a private equity accredited investor network to
collaboratively identify and vet promising early-stage companies and make investments with an
intentional focus on Maine and New England through pooling of the group resources and
expertise. Since inception, Maine Angels members have invested over $18 million in 67
8
emerging companies plus 77 follow-on
(additional rounds) investments in their
strongest portfolio companies. There are
over 53 members and the group continues
to grow in numbers and impact.
portfolio companies), and in 2015 as the
3rd most active angel group in New England
in Q2, and number seven for the most
active Angel group nationally for a number
of deals for the entire 2015 year. Also in
2015, Maine Angel members had 2 portfolio
companies with successful exits.
In 2012, Maine Angels invested over $3.4 M
in 21 companies. These investments
consisted of 13 new investments and 8
follow-on investments and 7 Maine
companies were authorized for the Maine
Seed Capital Tax Credit Program through
FAME. This was the strongest year since
inaugural investments in 2004, placing
Maine Angels number 10 in the number of
deals in the Halo Report survey of most
active US angel groups.
Harpswell makes no endorsement for these
investments which are limited to qualified
investors however we do find it worthwhile
to share information on this interesting
forum for investing.
In 2014, Maine Angels was again
recognized, for most "follow on" deals
nationally (additional investments in
Company Stage at Initial
Investment
Total Maine Angels Investment
per Company
Company Locations
Maine 44%
Pre-revenue 40%
$100k 27%
Post-Revenue 60%
$100-$199k 31%
$200-$399k 24%
>$400k 18%
9
New England 48%
Other
5%
Oil: short-term support – long-term, serious
headwinds.
Harpswell, despite having exceptional depth and experience managing energy assets, does not
look at investments in crude oil as a constructive long-term plan. We consider assets
committed to crude investments (aside from hedged investments) as being more of an exercise
in market timing and at the end of the day, that is a hard game to win. Over the last twelve
months, we have seen momentous swings in crude prices and few investors profited from both
the sell off and then the partial recovery.
economic are quickly usurping OPEC market
power and position as the global swing
producer. Bearish rhetoric from OPEC
countries which implied no production
adjustments in response to the lower prices
were intended to bring a level of financial
stress to the new shale producers that
would make it hard for them to recover.
We did see a dramatic fall in the number of
rigs being utilized for exploration and
development and this is ultimately a leading
indicator for production. Furthermore,
speculation on potential disruptions in
global supply and theories concerning Saudi
Arabia and impending internal conflict there
have helped to escalate oil prices.
The Bounce
The partial rebound in crude prices can be
attributed to a number of factors, most of
which are legitimate barometers of future
supply expectations. Drilling activity,
measured by rig counts, has reacted to the
soft prices (as well as the curtailed free cash
flow generated by energy producers).
Furthermore, many key energy producing
countries have suggested they intend to
restrain production in response to low
prices.
An Unsustainable Bounce?
Oil’s recent bounce and near-term support
are the byproduct of supply adjustments
and currency swings that could easily
reverse. This would result in resumed
pressure on oil prices. Rigs can easily be
redeployed and it is assumed that much of
the rig activity over the last year was aimed
at drilling uncompleted wells that can bring
on a meaningful amount of production
Countries dependant on oil revenue are
alarmed
As a reminder, the rapid fall in oil prices was
predominately the byproduct of over
production (versus demand concerns).
OPEC countries recognized the shale plays
and the new technology that made them
10
with minimal costs and time. Thus, we see
reasonable prospects for further pressure
on oil prices.
other energy demand by two-to-one. They
also expect solar and wind generation to
represent 80% of net added capacity
through 2050 and they expect those
sources to represent over a third of all
generation. (McKinsey & Company: Is Peak
Oil in Sight? June 2016).
Where do we stand from a long-term
perspective?
In the long-term, we look at a continued
path of technological innovation to open up
more potential reserves and ultimately
lower costs that would otherwise be
realized. Furthermore, we feel the
demographic landscape, along with
revolutionary breakthrough advancements
in energy efficiency technology, to soften
demand considerably. Thus, we expect
significant price resistance for oil over the
long run with an occasional spike associated
with supply disruptions and geopolitical
events.
Technological advancements that curtail
demand are real and will continue to shape
the future. We feel this is more of a threat
to producers than technological advances
on the production side of the equation
(such as fracking and directional drilling).
We see how fast the electric car has
evolved in developed markets and feel the
emerging markets will rapidly do the same.
Thus, we expect a good portion of the
expected growth in demand for
hydrocarbons from emerging markets to
not come to fruition as they leapfrog older
technologies and adopt the latest products.
Demand Trends
The bottom line is straightforward: we
don’t think the fundamentals support a
long-term investment in energy. When we
see “blood in the streets” (signaled by a
extraordinary selloff and long-term
valuations that reflect our outlook), we will
circle back with you.
McKinsey & Company recently published a
study which supported Harpswell’s view.
McKinsey reduced its long-term growth in
demand expectations by 30% through 2050
and attributed 100% of expected growth to
emerging market nations. McKinsey
expects electricity demand to outpace all
11
YTD Sector Returns - 6/30/2016
US Real Estate
12.05%
Utilities
23.24%
Technology
2.23%
Materials
7.53%
Industrial
Health Care
6.76%
0.33%
Financial-3.12%
Energy
14.69%
Consumer Staples
10.43%
Consumer Discret
0.60%
S&P 500
-5.00%
3.74%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Sector returns for the first half of 2016 were clearly bifurcated between those that were
impacted by lower interest rates and those that were not. Things were relatively quiet for
those sectors less impacted by falling rates.
With respect to those sectors most impacted, we focus most on banks, utilities and real estate.
Clearly utilities, which tend to be higher yielding, enjoyed the best returns. Real estate
(12.05%), which was recently added to several indexes and benchmarks, also tends to do well
when interest rates drop. They benefit as investors chase yield and real estate prices escalate
as borrowing costs go down. Energy bounced after a miserable performance in 2015 and
earned 14.69%.
Financials were the worst performing sector as low interest rates and a flat yield curve
generally make it harder for banks to grow earnings. The financials also bounced around this
year when energy bankruptcies were on investors’ minds. Several banks are on the hook for
billions of dollars and those write-offs could be painful for some.
Thank you your interest in Harpswell.
We work hard to surpass high expectations.
Please reach out with any questions or comments.
12
Monthly Flash Report
Commentary
June 30, 2016
Overview On June 24th, Britain's surprising vote to
leave the European Union—a development
commonly known as the "Brexit"—prompted a sharp
decline in global financial markets with volatility
continuing into Monday. Some segments of the
global equity markets recovered much of their Brexit
losses the balance of the week, closiing with modest
losses for the month. The U.K. now needs to pass
legislation formalizing the referendum results and
then request an exit according to Article 50 of the
Lisbon Treaty. It is unlikely this will happen before
the fall. In the short term, investors can expect
increased volatility as the Brexit drama unfolds, but
in the long term, it is not expected to result in a
material slowdown domestically, However,the Brexit
vote does heighten the potential for a recession in
Europe and is likely to be a further drag on already
slow global growth. Further concern for the near
future is the potential for other EU members to
consider exiting as well.
Equities The U.S. Equity Market unexpectedly rose
the last week in June as fears of a post-Brexit
tantrum failed to materialize. Broad equities staged a
dramatic recovery from Monday’s lows, helped by
increased M&A activity, after posting three
consecutive days of greater than 1% gains. The
S&P 500 index ended the week up 3.3%, which
snapped a streak of three consecutive weekly
losses. Large Cap stocks outperformed Small Cap
with Value outpacing Growth. EAFE declined 3.3%
with EU markets contributing more than 6% to the
losses partially offset by smaller declines in the
Pacific. In contrast, the Emerging markets increased
by more than 4% with Latin America leading the way.
One
Month
Three
Months
One
Year
Three
Years
Five
Years
1.0%
2.1%
4.3%
4.5%
9.0%
10.4%
S&P 500
0.3%
2.5%
3.8%
4.0%
11.7%
12.1%
Russell LG Value
0.9%
4.6%
6.3%
2.9%
9.9%
11.4%
Russell LG Growth
-0.4%
0.6%
1.4%
3.0%
13.1%
12.4%
Russell 2000
-0.1%
3.8%
2.2%
-6.7%
7.1%
8.4%
MLP Index
5.1%
19.7%
14.7%
-13.1%
-5.4%
3.2%
REIT Index
6.7%
7.4%
13.7%
22.7%
13.1%
12.3%
-3.3%
-1.2%
-4.0%
-9.7%
2.5%
2.2%
EAFE Small Companies
-5.2%
-2.4%
-2.9%
-3.3%
7.6%
5.2%
Emerging Markets
4.1%
0.8%
6.6%
-11.7%
-1.2%
-3.4%
China
1.2%
0.3%
-4.5%
-23.2%
3.6%
-0.2%
US Agg
1.8%
2.2%
5.3%
6.0%
4.1%
3.8%
US High Yield
0.9%
5.5%
9.1%
1.6%
4.2%
5.8%
Municipal Bonds
1.6%
2.6%
4.3%
7.7%
5.6%
5.3%
-0.8%
-3.2%
1.2%
-1.6%
-5.8%
-5.7%
British Pound
-8.7%
-8.0%
-10.4%
-16.1%
-4.9%
-4.1%
Japanese Yen
7.8%
9.5%
16.8%
18.7%
-1.5%
-5.1%
4.1%
12.8%
13.3%
-13.3%
-10.6%
-10.8%
S&P GSCI Crude Oil
-2.8%
18.9%
6.1%
-41.3%
-29.9%
-20.4%
Gold
8.5%
6.8%
24.3%
12.3%
2.2%
-3.0%
Domestic Equities
Dow Jones
International Equities
EAFE
Year
to Date
Fixed Income
Fixed Income The 10 Year Treasury Yield closed
at 141 bps, 100 bps below last year's level!
Germany, Japan and Switzerland continue to carry
negative yields on their 10 year securities. The UK
yields was pegged at 84bps at month's end.
Domestically, the 90 T Bill remained at 25bps while
the 30 Year Treasury yielded 221bps. Tax exempt
yields also declined but more modestly than
Treasuries. The 10 year municipal rate closed at
136bps, only 5bps below Treasuries making
municipals attractive to taxable investors. The 1 Year
municipal rate at 50bps was higher than the
comparable Treasury.
Currencies
EURO
Commodities
Bloomberg Commodity
Commodities Crude Oil closed just above
$48/barrel at month's end, recovering several
$/barrel following the Brexit vote a week earlier but
closed lower than the previous month . Gold closed
at $1333/oz in June, moving sharply higher from
May's close. Both Gold and Oil prices are being
impacted by the Brexit vote in terms of economic
growth, interest rates and inflation.
13