Sage Advice Quarterly Market Review 1Q2009

For market participants the first quarter probably felt a little better than it really was, thanks to a March equity rally, a less negative tone to some of the more recent economic data and several well received policy announcements. For the quarter, however, risk assets performed poorly overall and bonds outperformed developed equity markets by a wide margin (S&P 500 -11.00% vs. Barclays Aggregate Bond Index +0.12%). Performance within fixed income was mixed with Treasuries providing a drag to the index (-1.32%) for the first time in several quarters as longer-date yields rose and the curve steepened during the first quarter. Credit underperformed with investment-grade spreads moving wider, contradicting equities and leading to a -2% return for the sector. The offset to credit and Treasuries was the MBS sector, which delivered a positive return of 2.2% for the quarter and essentially lifted the Aggregate Index to flat territory.