First Quarter Perspective

The first quarter of 2012 was great for equity markets. We experienced a global-wide rally of double digit returns in many indexes. Here at home, the S&P 500 Index rose 12.59% and the Russell 2000 Index rose 12.44%. Overseas, international markets faired just as well with the MSCI EAFE Index gaining 10.98%.

The trend upward continued with real estate, as the S&P Global REIT Index rose 10.73%.

The picture was a bit different for fixed income securities. While the return for the Barclays Capital US Aggregate Bond Market was positive, it was only slightly so, gaining 0.30%.

The first quarter was also significant in that we saw the S&P 500 Index reach a four year high, closing above 1,400 and the Dow Jones Industrial Average close above 13,000 for the first time since May 2008.

As a result of the rally we have seen, now is a good time to look at rebalancing your portfolio. Looking at the wide range in returns above between equities and fixed income, one can easily see how a well-balanced financial plan can become misaligned. By rebalancing your portfolio on a regular basis, you ensure that your investment mix remains aligned with your long-term goals.

Without rebalancing, you can become overweight in one asset class, such as equities, which adds additional risk to your portfolio than had been planned. Conversely, if you become overweight in fixed income securities, your risk, along with the return you desire will decrease, resulting in a less likely scenario of you meeting your long-term goals. If you would like more detailed information on reblancing, read this post).

Following a well-balanced financial plan with discipline will increase your success at achieving your long-term goals.

About Chas Boinske

Charles P. Boinske, CFA, is a 30 year investment management veteran overseeing the strategic direction and portfolio management process for Independence Advisors, LLC. Have a question for Charles? CLICK HERE TO ASK CHARLES

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