U.S. stocks finished strong in the 4th quarter, producing gains of over 9%. Winslow stocks kept pace with the broad market indices during the final quarter and finished the year at over 30%. We delivered outperformance of several percentage points versus the broad market averages for 2021.
Despite finishing a banner year, we imagine many of our clients are now facing several anxieties: 1) inflation, 2) a choppy start to 2022 in the stock market, 3) anticipation of tightening of monetary policy by the Federal Reserve during the course of the year and 4) geopolitics and bipartisan bickering in Washington D.C.
We have mentioned in previous client letters about a rotation in the market to different areas of leadership. We began adding to areas of the market in the second quarter of last year such as materials, energy and real estate that would benefit from some inflation. As interest rates tick upward, investors are allocating capital toward financials, energy and “old tech” versus “speculative tech” and traditional defensive sectors.
Our portfolio is well positioned for success despite the aforementioned signs of distress or worry. In our balanced accounts, we have some more attractive options in the fixed income market. The five-year U.S. Treasury yield has now crept above 1.6% and we have started to nibble at these coupon rates.
