fi360: Fourth Quarter 2015 Markets in Review

PITTSBURGH, Jan. 21, 2016 /PRNewswire/ -- Domestic equities struggled in December, but due to solid gains during the rest of the fourth quarter, the year finished essentially flat. Stocks outperformed bonds for the fourth consecutive year, the S&P Composite climbed to an all-time high in May, and several sectors were buoyed by merger and acquisition activity. According to data from Dealogic, 2015 was the biggest year for global M&A with over $5 trillion in transactions and $2.5 trillion in the US. Large-cap benchmarks outperformed small-cap benchmarks for the year and growth outperformed value. The 50 largest stocks at the beginning of 2015 were up an average of 1.5% by year-end, while the 50 smallest stocks were down 11.9%. However worries about global economic growth, China, interest rates, commodities and the energy sector were a drag. Consumer discretionary was the best performing sector for the year up 10.1%, while energy was the worst performing sector down 21.1% as oil prices ended the year at an 11 year low, and commodities had their fifth consecutive year of negative price returns.

Global markets underperformed the US markets in 2015 and emerging markets stocks lagged their developed market counterparts by a wide margin. Small caps outperformed large caps, and growth outperformed value. Once again, Chinese economic weakness, oil, commodities and central bank actions drove uncertainty and underperformance for the year. Almost every sector declined in the EAFE, with health and utilities barely squeaking into positive territory.

Fixed income performance was relatively weak in 2015. Bonds were more volatile and yields trended higher as the Federal Reserve made its first interest rate hike since 2006, raising the federal funds target rate by 25 basis points on December 16. Investors favored high quality bonds as concerns about the high-yield market triggered record outflows from corporate bond funds.

The fi360 Fiduciary Score® – 4th Quarter 2015 Review

The fi360 Fiduciary Score is a peer percentile ranking of an investment and provides an evaluation using nine quantitative criteria grounded in fiduciary practices. The Score evaluates investments across a spectrum of quantitative data points to determine if the investment meets a minimum fiduciary standard of care. The scores, which range from 0 to 100 (with zero being the most preferred mark), are calculated on a monthly basis for investments with at least three years of history. The nine criteria include: regulatory oversight, track record, assets in the investment, stability of the organization, composition consistent with asset class, style consistency, expense ratio/fees relative to peers, risk-adjusted performance to peers, and performance to peers. The complete fi360 Fiduciary Score methodology is available here.

Scoring System

• 1st Quartile (0-25)
• 2nd Quartile (26-50)
• 3rd Quartile (51-75)
• 4th Quartile (76-00)

Equity strategies that were a "0" Score as of 12/31/14, returned 4.2% for the quarter, and -0.6% year-to-date. Top quartile (1-25) returned 4.1% for the quarter and -0.9% year-to-date, Second quartile (26-50) were 4.2% for the quarter and -1.2% year-to-date. Performance for the third and fourth quartile was lower.

Fixed income strategies that were a "0" Score as of 12/31/14, returned 0.1% for the quarter, and 0.2% year-to-date. Top quartile (1-25) returned 0.0% for the quarter and 0.1% year-to-date, Second quartile (26-50) were -0.1% for the quarter and -0.3% year-to-date. Performance for the third and fourth quartile was lower Copyright © fi360, Inc. 2016. All rights reserved.

fi360 Fund Family Fiduciary Ranking Report – 4th Quarter 2015

Since 2003, the fi360 Fund Family Fiduciary Rankings has ranked fund families based on the percentage of their individual funds which receive a top quartile fi360 Fiduciary Score. The report also presents the change (improvement or decline) in ranking from the prior quarter.

Fund families must contain at least five distinct funds with a three year history to be considered in the ranking. In addition, only open ended mutual funds, exchange traded funds and money market funds are considered in the report.

Overall Rankings

Q2 2015

• 29.98% (7,135) of funds scored 0-25
• 21.92% (5,216) of funds scored 76+
• 23,799 funds considered

Q3 2015

• 30.27% (7,273) of funds scored 0-25
• 22.25% (5,346) of funds scored 76+
• 24,030 funds considered

Q4 2015

• 29.84% (7,576) of funds scored 0-25
• 23.11% (5,869) of funds scored 76+
• 25,391 funds considered

This data represents a decrease of 0.43% for funds scoring in the First Quartile (0-25) and an increase of 0.86% for funds scoring in the Fourth Quartile (76+) from Q3 2015 to Q4 2015.

To download a copy of the fi360 2015 Q4 Fund Family Rankings Report, click here.

About fi360

The author of this article was Matthew Wolniewicz, Chief Revenue Officer of fi360.  fi360's mission is to help institutions and advisors gather, grow, and protect assets through better investment and business decision-making. fi360's capabilities include professional development, software applications, and research and practice management. fi360 is the home of the AIF® designation and the fi360 Toolkit®, and is the parent company of Ann Schleck & Co., CEFEX, and IPS AdvisorPro. For more information about fi360, please visit www.fi360.com or call (866) 390-5080.

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