Well, we all know that it was actually a pretty
spectacular quarter, but I think we need to put a caveat on that to understand
how we got here.
When we're looking at October, October was not a really
good month because we were in this transition period, where the Fed was saying,
"Maybe we might pause, maybe we might skip." People were still very
concerned. We still had pretty high inflation rate coming around. When in fact,
let me give you the perspective of how the Fed drove this market.
As of January 1st, 2023, the 10-year treasury was at 3.79%.
By the time we got to September, it was 4.59%, so we had a pretty big jump. And
actually, we peaked at almost 5% for the 10-year treasury, which came in about
4.98% on October 19th. People were still a little bit concerned during the
month of October. But again, we were hearing a little bit more dovish
conversations from Fed officials, whether it be from the Fed chair, or whether
it was Fed governors around. They were talking about, "Yes, we can probably
skip. Maybe we can slow down. We're seeing a little disinflation going
That was also nestled into the fact that, actually, the Q3
earnings report, which came in in Q4, actually beat exceptions. Mind you, they
were lowered expectations, but they were really good. But, guidance was poor.
People were a little bit concerned in October, but the party really started to
pick up as we saw these interest rates start coming down. By December 29th, we
saw 10-year treasury come in at 3.88%, a 71 basis point drop. This was really
the tailwind, if you will, for the markets doing well.
Let's take a look at this. First of all, we do know that
the yield curve was still inverted. That means that the 10-year treasury was
basically lower than a two-year treasury. What we saw is that we had about a 35
basis point negative relationship. Normally, we expect 10-years to be longer
than the two-year, and that was vice versa. We saw some pretty big numbers. In
fact, at the short end of the curve, the two-month was the highest yield you
could get. At the end, it was 5.59%. The 10-year, as I said, it closed at
We still have concerns of a recession, but the NASDAQ was
up for the quarter 13.56%. Russell 2000, as people were saying, "Interest
rates are coming down, small caps might come into vogue," they were up
13.56% as well. Dow turned a nice 12.48% return. S&P came at 11.24%. But
mind you, this is where a little concern goes on, the NADAQ finished the year
at 43.42%. Mind boggling, great blowout returns.
What helped this market though, helped us get these
returns is we saw oil prices come down for the quarter, about 5.67%. Because of
the safety issue, we saw that gold was up about 1.19%. But really, the tech
rally, the Mag Seven as everybody's talking about, really did the job of
keeping people in the role. But fortunately, we saw some rotation into other
sectors that actually did well.
So again, if you asked me what the quarter did in October,
we were at zero, or basically positive in some of the classifications. But as
we took a look, closed-end funds entered the area and got into positive
territory. This is on NAV basis, so we're going to do this on net asset value
basis. Not on the market prices, but on the NAV. Closed-end funds basically
returned, on the equity side, about 7%. And fixed income funds returned about
7.36% for the quarter. So it was really, really strong.
On the year, if we take an overall look, not as handsome
as the NASDAQ and not as handsome as the Russell. But you got to remember,
we're put in a lot. We're putting real estate sector focused funds in there.
Equity funds were up 9.69%. Fixed income funds were up 10.73%. So overall, the
market's set up for a very strong return for the quarter for closed-end funds.