Investment Advisory Team
A Conversation with Mr. & Mrs. C
Our Quarterly Market Report reflects a hypothetical conversation with Mr. and Mrs. C, long-time clients of Hefren-Tillotson. In this year-end investment review we discuss the robust returns that characterized markets in 2017 amid a synchronized global economic expansion. We discuss the unusually low volatility investors enjoyed, but caution such placid market behavior has historically proven short-lived. Finally, we discuss our expectations for the world economy and markets in 2018 and the years ahead.
Mr. C: As always, it is a pleasure to sit down with you and discuss our financial situation. You probably enjoy having client reviews after years like we experienced in 2017.
HT: It is always great to be with you. Meeting and interacting with clients is the most rewarding part of my job, in good years for the markets or bad. While years like 2017 are always welcome, I have been around the block enough times to know that markets are cyclical and can change quickly. While sometimes a challenge to do so, it is a good approach to avoid letting emotions swing with the markets. Things are “steady as she goes” at Hefren-Tillotson.
Mrs. C: I appreciate that about you. We have been able to stick to our plan despite many changes in the markets and even in our own situation.
HT: Thank you. I deeply value the relationship we have developed and find great joy seeing your financial success. It has been rewarding to see many of your life dreams we have discussed over the years come to fruition. Our focus is so much broader and deeper than the investments held in your accounts. As we have talked about before, I strive to be your most trusted advisor. To achieve that, a few things are essential from my point of view — act with integrity; be transparent and sincere; do what I say I will do on a timely basis; and care deeply about your well-being. Thankfully, these thoughts are shared across our firm, which makes it a unique and special place to work. The whole team here is working together with shared values toward your financial success.
Mr. C: It is certainly reassuring to know that. It is also nice to see our portfolio doing so well this year. We are interested ingetting a review of where we stand, hearing about your outlook for 2018 and where we should be putting out money, and also discussing how we can encourage our kids to get on the right track financially.
HT: Let’s dig into each of those items, starting with a review of 2017. It will be a year to remember. There were three unique dynamics that played out. First, the size of gains was outstanding. Markets around the world enjoyed outsized returns, led by international developed and emerging markets, which gained 26% and 38%. U.S. stocks, which have led the world markets for much of the current expansion, rose a solid 22%. Technology and growth stocks were big winners again, rising 39% and 27% respectively, continuing what has been an exceptional period for these two areas. Lastly, bond markets enjoyed solid returns,despite the low level of interest rates.