Investors shake-off disappointing growth, financial assets move higher

• Risk assets performed well in the quarter with all major equity indices posting positive returns. Emerging market equities outpaced U.S. and non-U.S. developed equities for the first time since the third quarter of 2012. Emerging markets saw a reversal in capital flows which helped the undervalued region experience some multiple expansion. Additionally, capital accounts in many of the underlying emerging market countries improved (moved from deficits to surpluses)
• The U.S. Federal Reserve continued its tapering program, but the market remained unfazed. The 10-year Treasury rate dropped 20 basis points in the quarter to 2.53% as fixed income supply subsided and demand increased. Rates dropped by an even larger degree in the long-end of the Treasury curve causing it to flatten. Non-core fixed income benefited from further tightening in high yield spreads and currency appreciation in non-U.S. bonds
• Inflation Protection Assets (i.e. commodities, real estate, etc.) continued their upward move in the 2nd quarter. Commodities were influenced by a multitude of idiosyncratic and geopolitical events. Coffee rallied sharply on the year due to dry weather in Brazil, nickel prices were the beneficiary of a decision by the Indonesian government to ban mineral ore exports, and oil prices moved higher with rising hostility in Iraq. REITs were one of the quarter’s (and year’s) best performing asset classes due to a compression in cap rates and falling long-term Treasury rates

• 2Q14 Global Positioning Statement™
• 2Q14 Global Equity Review
• 2Q14 Fixed Income Review
• 2Q14 Hedge Fund Review
• 2Q14 Private Equity Review