Semi-Annual Report, 12/31/2014 Dear Fellow Shareholder, During the six months ending December 31, 2014, the S&P 500® Index and the Russell 2500® Index had total returns of 6.12% and 1.06%, respectively. Continued moderate growth in the U.S. supported equities, while the rapid decline in oil prices had a negative impact on the energy sector and drove an overall increase in spreads and volatility of the high-yield fixed income market.
While market signals are not always correct and can change on a whim, a lot can be gleaned by listening to what they are saying. Low and sometimes negative interest rates as well as ongoing declines in commodity prices within developed markets act as signals to prepare for economic weakness and a potentially deflationary environment. While these concerns have certainly characterized the past six months, the magnitude of the decline in oil prices has the potential to change the outlook during 2015. Continue Reading »