December 2020 in Review

Betsy Pierson, CFA, Chief Investment Officer

Happy New Year!

This is Betsy Pierson, Chief Investment Officer with Midland Wealth Management.

December was another strong month for equity investors. Small cap, as represented by the Russell 2000, returned 8.65% during the month. The emerging market index was not far behind with a 7.35% return, which was in response to a weaker dollar and optimism surrounding the new year.  With the implementation of vaccinations, the market began to anticipate a stronger 2021. As we all know, equity markets look 6 to 12 months ahead and this is no different. The S&P 500 increased 3.84% during the month with the large banking institutions seeing a boost from the announcement regarding the ability to implement buyback programs once again. 

With the strong moves in December, markets closed at or near all-time highs at year end. If you look back at March, who would have thought markets would reach these highs? For the year, the S&P 500 returned greater than 18%, the Russell 2000 increased 20%, while the Emerging Market Index was also up over 18%. The laggard was the developed international market represented by the MSCI EAFE Index, which providing only an 8% return, which is really nothing to sneeze at. 

During December, fixed income investors were provided positive returns, albeit slight, but were provided strong returns during the year with the Barclays Aggregate bond index returning 7.5%. As investors look at the year end values of portfolios, it should certainly put a smile on your face.

Looking ahead into the new year, we may see some market pullbacks, because as we all know nothing goes straight up. The upcoming week may bring more volatility with the Georgia Senate runoff and the acceptance of the electoral college vote. Either of these could cause greater volatility on a short-term basis but looking further into 2021, we do believe there are reasons to be optimistic. Vaccines are being distributed, stimulus was approved, and hopefully sometime during the 3rd quarter, enough people will have been vaccinated to allow life to return to a more normal environment. Equities should do better than bonds for the year and long-term investors should be rewarded. 

Goodbye to 2020 and looking forward to a wonderful 2021!

Thank you and don’t hesitate to reach out to your relationship manager if you have any questions. 

Midland Wealth Management is a trade name used by Midland States Bank, its subsidiary Midland Trust Company and its affiliate Midland Financial Advisors, an SEC registered investment advisory firm. Investments are not insured by the FDIC or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank or any federal government agency, and are subject to risks, including the possible loss of principal.