During a period marked by a resurgent pandemic and political uncertainty, the fourth quarter of 2020 was a robust one for stocks, with each of the major indexes posting double-digit gains. Despite the turmoil and early-year losses, all major benchmark indexes closed 2020 well ahead of their 2019 closing marks. On the last day of the year, the S&P 500 ended at an all-time high.
The November presidential election resulted in the defeat of President Donald Trump by former Vice President Joe Biden, with the post-election period dominated by attempts to overturn the results through federal courts and state legislatures. Nevertheless, positive news came at the end of the year with the development and initial dissemination of COVID-19 vaccines and additional legislation that provided $900 billion in pandemic-related stimulus. Those developments, coupled with a low interest-rate environment, made stocks a viable option.
Less uncertainly in the fourth quarter of 2020 supported the rally in emerging market fixed income, including in the sukuk sector. Putting the U.S. elections and Brexit negotiations in the rearview mirror had a positive effect on credit markets. Investors shifted their focus towards the recovery in the year ahead.
The new year brought with it a sense of hope for a return to some form of normalcy in our daily lives. Although that hope is now being tested in the aftermath of a riot at the U.S. Capitol during the January 6th certification of Joe Biden’s electoral victory, markets continue to show their resilience. Investors would be wise to stick to their strategic asset allocation and not attempt to make changes to a portfolio in anticipation of a specific event or outcome. Investing is a long-term proposition and requires patience.
Thank you for your continued trust and investment.