The talk of future Fed interest rate increases dominated the markets, with the S&P declining 1.58% in March. Despite these worries, the S&P ended the quarter in positive territory (+0.95%) for the ninth straight time — an event not seen since the first quarter of 1997 when Alan Greenspan coined the phrase “irrational exuberance.” We think it might be time to have a conversation with clients about managing risk.

First Quarter ReCap:

Small and midcaps led the domestic equity markets in the first quarter (Russell 2000 up 4.32% and S&P 400 up 5.31%). International diversification finally paid off as the MSCI EAFE index was up 4.88% this quarter.

The fixed income markets were positive across all sectors in the first quarter. Notably, the high yield market bounced back from a tough second half in 2014 and ended up 2.52%. Given the volatility in the fixed income markets, we think a tactical approach is important, and we see opportunity in high yields.