The second quarter of 2015 will most likely be remembered for several news stories that seemed to have significant implications for investors. While the headlines were dominated by the Greek crisis in Europe, financial markets were also concerned with the ongoing municipal bond default saga in Puerto Rico and the dramatic sell off in the Chinese stock market.
The Greek crisis continues to evolve by the hour. It is important to remember that the Greek economy is very small (around 2% of the Euro area’s GDP); the majority of Greek debt is currently held by the IMF, the ECB, or other European governments. Investors typically have very little direct exposure to Greek markets. While sentiment may lead to increased market volatility, the direct impact of the Greek crisis may ultimately prove to be inconsequential to US investors.
Closer to home, Puerto Rico continues to edge closer to default. But Puerto Rico truly is an outlier when compared with the 50 states, all of which have been experiencing improved economies, better budget performance and shrinking debt loads. For bond investors considerations such as the direction of interest rates and the shape of the yield curve will have a far greater impact on future performance than the ultimate outcome in Puerto Rico. As rates rise and bond market volatility increases, disciplined investors should be able to find better buying opportunities than have been available over the last seven years.
Across the Pacific, the Chinese market sold off dramatically in the second quarter, losing over 20% from its market top. Most of the most recent rally in Chinese stocks has been driven by local investors buoyed by last fall’s stimulus efforts by China’s central bank. The recent selloff seems to be driven by doubt that this stimulus-fueled rally is sustainable. China’s central bank has already responded to this selloff by injecting even more stimulus into the financial system. The situation in China is probably the most worrisome for investors and is something that should be carefully monitored going forward.
Despite the negative headlines, global equity markets were mostly flat for the quarter. Despite no direct action by the Federal Reserve to raise rates, bond markets sold off in June as interest rates spiked. The 10-year Treasury, which began the quarter at 1.9%, reached 2.5% before ending the quarter at 2.3%. As a result, the Barclay’s US Aggregate Bond Index was down -1.7% for the quarter, which pushed its year-to-date return to -0.1%. As interest rates rose, sectors that are particularly interest rate sensitive also sold off. The Wilshire US REIT Index was down -9.9% and the Alerian Energy MLP Index was down -6.1% for the quarter. Among the best performing stock sectors were health care stocks, which are up almost 10% year-to-date and Consumer Discretionary stocks, which are up almost 7% so far this year.
Our purpose at RGT is to serve as our clients’ trusted advisor. We pride ourselves on building steadfast relationships with our clients. To accomplish this, we must employ team members that are good listeners and skilled collaborators.
We want each individual to feel appreciated, heard, and involved as an important member of our team. We hire talented people and we strive to give them a work environment in which they can flourish.
Perhaps we are biased, but we feel that RGT employees are outstanding individuals, both personally and professionally, making RGT a great place to work.
Apparently the Dallas Business Journal and the Orange County Business Journal agree. In 2015, both RGT offices were included on their respective city’s list of Best Places to Work, for the second time. Independent research firms surveyed employees from several hundred companies before bestowing the honor in each city.
When all is said and done, relationships are the foundation of our firm. RGT is proud to be taking good care of our people so they can take great care of our clients.
Here are just some of the things are employees are saying:
“Time and money is devoted to the development of our individuals. All employees were provided with access to a professional coach… [and] our professional development work continues.”
“We have a number of recognition programs like the rock, literally a rock that is passed around as a trophy and resides on a person’s desk when they are honored for good work.”
“RGT understands we all have families…and thus encourages all employees to maintain a work-life balance…”
“My immediate supervisor…has time for the personal touches…and motivates me to go the extra mile to ensure…RGT’s success.”
“Very buttoned up professionally yet such a warm, family feel. Absolutely the highest integrity.”