The following is Sit Investment Associates’ quarterly global outlook and strategy summary. This summary contains the collective opinions of our analysts and portfolio managers and is provided for informational purposes only. At the end of each calendar quarter, the full publication is available. While the information is accurate at the time of writing, such information is subject to change at any time without notice, and therefore, so may the investment decisions of Sit Investment Associates.

Global Outlook and Strategy

July 10, 2015

In June, U.S. equity markets gave back most of their positive return from the first two months of the second quarter. The S&P 500 Index retreated -1.9 percent for the month and gained +0.3 percent for the second quarter. International markets, as represented by the MSCI EAFE Index, did worse in June falling -2.8 percent, but performed better for the quarter, increasing +0.6 percent. Taxable bonds declined -1.1 percent for the month of June and -1.7 percent for the quarter, while municipal issues fared somewhat better, but still finished the month and quarter in negative territory down -0.1 percent and -0.9 percent, respectively. With respect to the U.S. economy, the final (third) estimate of first quarter U.S. real GDP growth of -0.2 percent was in line with expectations and improved from the second estimate of -0.7 percent. With a weaker currency, lower energy prices, and an accommodative monetary policy acting as tailwinds, many of the Euro Area economies demonstrated continued improvement in the second quarter. Japan’s recovery, following last year’s consumption tax hike-induced slowdown, remains on track. Recent data indicate that economic growth in China may be stabilizing. In domestic taxable fixed income portfolios and tax-exempt portfolios, we continue to shorten duration in anticipation of a flattening yield curve. Domestic and international equity portfolios are maintaining holdings in diversified, high-quality, growth-oriented companies. This quarter our spotlight topic is the outlook for the healthcare sector, one of the most rapidly growing areas of the economy.

Spotlight Topic- healthcare: the lifeblood for growth portfolio performance

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August 5, 2015

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