Monthly Market Update - April 2015

International stock markets posted strong returns in April. Developed international large stocks returned 4.1% and emerging markets surged 7.7%. First quarter U.S. real GDP growth came in lower than expected at 0.2%. The S&P 500 Index rose 1.0%, outperforming U.S. small cap stocks, which returned -2.6%. Bond returns were flat and the 10-year Treasury climbed to 2.1%. Commodities and REITs returned 5.7% and 2.9%, respectively.


  • The initial estimate of first quarter U.S. real GDP growth came in at 0.2%. Positive contributions from increased consumer spending were largely offset by a decline in business investment and an expanding trade deficit.
  • Inflation (CPI) in the most recent month was 0.2% bringing the year‐over‐year inflation rate up to 0.0%.
  • The April jobs report was strong as employers added 223,000 jobs. The U.S. unemployment rate ticked down to 5.4%.


  • The S&P 500 Index returned 1.0% and U.S. large value stocks returned 1.7%. Energy was the strongest sector with a 6.7% gain for the month.
  • Developed international large cap stocks gained 4.1% and large value stocks increased 4.4%. International small cap stocks performed even better and are up 11.2% year‐to‐date.
  • Emerging markets were up 7.7% in April. Russia returned an astounding 17.3%, bringing its year‐to‐date return to 39.2%. Returns for China and Brazil were equally impressive with gains of 16.7% and 16.8%, respectively.


  • The 10‐year U.S. Treasury yield increased to 2.1%, up from 1.9% the month prior.
  • TIPS returned 0.7% and foreign bonds fell 0.9%. Short‐term and intermediate‐term bonds were flat.


  • Commodities (+5.7%) regained some early year losses as oil prices recovered. REITs fell 2.9%.

Now That Tax Season Is Over…

With tax season winding down it serves as a timely reminder as to why tax conscious investing is so important. If you’re like most people you could probably find better ways to spend your money than paying unnecessary taxes.

At the risk of stating the obvious, minimizing the tax bill over your lifetime is an important part of building your ideal future. But with the tax code now over 70,000 pages long that may seem like a daunting task. Fortunately, when it comes to your portfolio, you can rest assured that we are doing everything we can to maximize your after‐tax return.

One way we minimize taxes is through utilizing index funds. A recent study by Vanguard citing Morningstar data showed that on average, actively‐managed funds have a 43% higher annual tax cost. This makes sense considering actively‐managed funds have to trade frequently between securities they believe to be mispriced. This leads to a large amount of unnecessary capital gains that index funds can avoid.

While index and passively structured funds are naturally tax efficient, fund selection among index funds is still important. Savant employs a separate model for taxable accounts which takes advantage of tax‐managed funds. These funds are managed in ways which minimize distributions to shareholders.

Lastly, a well thought out “asset location” strategy could be the most important contributor to minimizing your tax bill. As a general rule, it is best to keep bonds in qualified accounts when possible to avoid the personal income tax rate on the bond interest payments. It is also best to keep your highest growth assets in Roth accounts (which have tax‐free withdrawals) where you won’t have to pay tax on any gains. Savant monitors and ranks its model funds tax efficiency annually for each account type. Your asset location strategy is then customized based on your available mix of assets and account types. These are just a few of the ingredients for creating and maintaining tax efficient portfolios. We believe it is critical to manage taxes year round, not just in the month of April!

Sources: Bureau of Economic Analysis (BEA), Federal Reserve, Institute for Supply Management, JP Morgan, Morningstar Direct, Standard and Poor's, Wells Fargo, Yahoo! Finance, BofA, Merrill Lynch,

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