Hello, and welcome to the IVA Weekly Brief for Wednesday, April 1.
There are no changes recommended for any of our Portfolios.
Stocks ended the month on a high note, with 500 Index (VFIAX) rallying 2.9% yesterday. Before that late surge, the flagship index fund was down 7.7%—on track for what would’ve been its 25th-worst month since its 1976 inception.
In the end, the damage was less severe. 500 Index finished March down 5.0%—still a meaningful decline and among the fund’s worst 10% of months, but not nearly as dramatic as it once appeared. Notably, the index has yet to slip into correction territory (a drop of 10% or more from its prior high).
Still, a decline of this magnitude raises an important question: What tends to happen next?
Looking back, 500 Index has fallen at least 5.0% in a single month 52 times. On average, it returned 14.8% over the following 12 months—better than its long-term average of 12.9%.
That’s encouraging—but not a guarantee. The index was positive about 80% of the time in the year following those sharp monthly drops. In other words, most of the time—but not all.
So, if you have the cash—and the fortitude—this may be an opportunity to put money to work.
But it’s not a slam dunk. And as I told Premium Members in today’s Monthly Recap, for most investors, simply sticking to your plan is more than enough to succeed.
BondBuilder Arrive
As expected, Vanguard finally launched its Target Maturity Corporate Bond ETFs—under the BondBuilder moniker—on Thursday, March 26.
Premium Members can read my full take on these new ETFs—what they are, where they fit and how to use them—here.
Our Portfolios
Our Portfolios are showing acceptable returns for the year through Tuesday. The Aggressive and Growth Portfolios are down 1.7%, the Aggressive ETF Portfolio is off 2.0%, the Moderate Portfolio is up 0.6% and the Conservative Portfolio is up 0.5%.
This compares to a 4.0% decline for Total Stock Market Index (VTSAX), a 1.8% return for Total International Stock Index (VTIAX), and a 0.1% gain for Total Bond Market Index (VBTLX). Vanguard’s most aggressive multi-index fund, Target Retirement 2070 (VSNVX), is down 1.4% for the year, and its most conservative, LifeStrategy Income (VASIX), is down 0.4%.
IVA Research
Yesterday, I told Premium Members how to jumpstart a young person’s retirement by opening (or adding to) a Roth IRA.
Until my next IVA Weekly Brief, have a safe, sound and prosperous investment future.
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