Q4 2020 Portfolio Commentary
In the fourth quarter, our strategy underperformed the S&P 500, our primary index, returning 7.6% vs. 9.1% for the index. For 2019, our strategy outperformed the index by 260 basis points, returning 34.1% vs. 31.5% for the index. Ultimately 2019 was the best performing year for the S&P 500 index since 2013. Progress towards a China and USA “skinny” trade deal encouraged investors to take on more risk and that became more evident as the quarter progressed. The Federal Reserve earlier in the quarter lowered the Federal Funds rate target to 1.50%-1.75% as the trade wars fears began to impact the economy. As time passed, yield curve inversion fears seemed to fade into the rear-view mirror and even cracks in the overnight Repo markets went unnoticed.