Q1 2022 Market Update

Wednesday, April 6, 2022 - 08:17

The following Q1 2022 market update provides context for the investment performance of your charitable assets.

From Cambridge Associates, investment advisor

Market review

Most global assets declined in the first quarter due to a confluence of economic, market-driven, and geopolitical factors. Russia’s invasion of Ukraine is devasting and has broad-reaching political, humanitarian, and economic implications that remain top of mind for us all. There are also many potential market and portfolio implications stemming from the crisis that investors are considering, and we expect this will lead to continued heightened levels of volatility in the near-term.

Global equities fell for just the second time in the last eight quarters. US equities underperformed compared to other developed countries but outperformed emerging markets counterparts. Value and large caps bested growth and small-cap equivalents, respectively. Small caps and tech stocks briefly fell into bear market territory but finished well above intra-quarter lows. Meanwhile, large caps dipped into correction territory before regaining momentum in the second half of March to finish the quarter just 6.0% below the all-time highs. Nine of 11 S&P 500 Index sectors declined, led down by cyclicals and tech-heavy communication services, consumer discretionary, and information technology.

Fixed-income assets declined as nominal interest rates rose and inflation continued to spike. US fixed income assets experienced their worst quarterly decline since 1980 as interest rates rose across maturities. Commodities, particularly energy-related assets, were top performers as oil & gas prices surged. Commodity futures advanced by the most in more than 30 years, boosted by double-digit gains in agriculture, industrial metals, and energy, which advanced nearly 50%.

As the situation in Ukraine remains extremely fluid, it is still too early to assess the full economic and market implications of the war. The impact on global geopolitics, commodity markets, supply chains, inflation, monetary and fiscal policy decisions, and sentiment about investing in markets like China and Taiwan are all factors we continue to monitor. In the near term, we expect continued volatility in the markets. Thrivent Charitable’s portfolios are well-diversified and designed to withstand various economic and market environments, and they continue to do so effectively through this crisis. Our go-forward priorities are to know what we own, talk to our managers, assess the portfolio risks, and look for opportunities that may arise. We believe that staying calm, invested, and prepared is the best course of action at this point.