U.S. bond market
as of December 31, 2017
Global stock markets were resilient over the quarter ended December 31, 2017, with emerging markets outperforming developed markets (a trend that characterized much of 2017). In the United States, stocks hit record highs as investors welcomed new tax legislation, strong corporate profits, low unemployment, and decent economic growth.
The Federal Reserve also acknowledged the health of the economy, raising interest rates in December for the third time in 2017. Although expansionary monetary policies outside the United States supported bond prices during the year, central bank actions suggested a bias toward less accommodation in 2018.
U.S. Stock market
- The overall U.S. fixed income market, as measured by the Bloomberg Barclays U.S. Aggregate Float Adjusted Index, returned 0.41% for the fourth quarter of 2017 after returning 0.83% for the third quarter. U.S. Treasuries outpaced corporate bonds for both quarters.
- The yield of the benchmark 10-year U.S. Treasury note closed December at 2.41%, down slightly from 2.44% a year earlier.
- U.S. stocks recorded solid results for the quarter.
- The CRSP US Total Market Index, the benchmark for Vanguard Total Stock Market Index Fund, returned 6.34% for the quarter and 21.19% for the 12 months ended December 31. For the quarter, all 11 sectors advanced, with consumer discretionary, technology, financials, and materials climbing the most. For the 12 months, nine sectors advanced; technology, health care, and materials posted the highest returns, while energy and telecommunication services declined.
International stock market
- Money market yields continued to rise. Vanguard Federal Money Market Fund’s average weighted maturity on December 31 was 102 days. The fund maintained its high-quality portfolio and continued to benefit from broad diversification and low fees.
TIFF Multi-Asset Pool
- International stocks outperformed U.S. stocks over the fourth quarter. Emerging markets in particular benefited from strong earnings growth, a weaker U.S. dollar, and accommodative global monetary policies.
- The Spliced Emerging Markets Index climbed 6.70% for the quarter and 31.06% for the 12 months. For the quarter, it was ahead of European markets but lagged developed Pacific markets.
- TIFF Multi-Asset Pool for the quarter was 3.37% higher than the CPI+5 index and 0.52% higher than the Constructed Index and 0.64% higher than the 65/35 Mix.
- TIFF Multi-Asset Pool returns are based on the total returns of the underlying investments, net of three components:
- The fund's expenses
- Change in share price
- Reinvestment of dividends and capital gains