rwbaird.com
Q1 2018 Market ChartBook
March 31, 2018
Baird Private Wealth Management
Wealth Management | Capital Markets – Investment Banking | Private Equity | Asset Management
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Table of Contents
03 19 26 35
Economy & Market Domestic Equity International Equity Fixed Income
Market Highlights
The Markets at a Glance
Returns by Asset Class
S&P 500 Index
Economic Growth
Inflation Watch
Jobs Market
Housing Market
Consumer Health
Corporate Profitability
Market Volatility
Commodity Markets
Energy Markets
Mutual Fund and ETF Flows
Fund Flow Heat Map
U.S Equity Snapshot
Asset Class Performance
U.S. Sector Performance
Investment Style Leadership
Historical Market Valuations
Historical Sector Valuations
Mutual Fund Performance
Global Market Performance
Intl. Equity Performance
Country Performance
Sector Performance
Investment Style Leadership
Global Market Valuations
Country Valuations Ranges
Bond Market Snapshot
Maturity/Credit Performance
Yield and Volatility
U.S. Treasury Bonds
Corporate Bond Yields
Bonds Spreads
Mutual Fund Performance
Robert W. Baird & Co. Member SIPC. 4
Q1 2018 Market Highlights
Economy and Market
At a Glance: The equity market broke its quarterly
win streak in Q1 with an impressive final tally of eight
positive consecutive quarters. Broad equity markets
fell modestly in Q1 as investors became more
concerned with the pace of rising interest rates, the
threat of tariff wars and weakness in the Technology
sector stemming from increased regulatory rhetoric.
Final revisions of Q4 GDP showed economic growth
clocked in at 2.9% YoY and 2.3% for the full year.
2018 economic growth and corporate earnings should
accelerate as companies and consumers benefit from
lower taxes and a recently passed $1.3 trillion
spending bill.
Economy: Headline CPI rose 2.2% YoY in February,
while Core CPI, which excludes food and energy,
came in at 1.8% YoY. The market easily digested this
report as it was largely consistent with recent
releases and the Fed’s backdrop. The US labor
market remains strong, adding an average of 242,000
jobs for the previous three months through February.
Recall the market was spooked by a 2.9% jump in
hourly earnings in January. Some of these gains were
reversed in February (0.1% increase in average
hourly earnings) leaving the 12-month average at a
stable 2.6%. The unemployment rate remains at
4.1%, while the participation rate rose to 63%.
Fed Speak: The Fed left rates unchanged in January,
which marked Yellen’s last meeting as Fed Chair.
Jerome Powell assumed the Chairman role and
raised rates 25 bps to 1.50-1.75% at his first meeting
in March. This increase was largely expected, as are
two more in 2018, but the market was spooked by the
Fed’s 2019 outlook. They now expect to raise rates
three times in 2019 vs. two prior as the economy has
strengthened. That said, Powell is expected to
maintain the slow and steady approach to
normalization.
Fixed Income
At a Glance: The broad US bond market, measured
by the Bloomberg Barclays US Aggregate Index,
returned -1.5% in Q1, as yields across the Treasury
curve rose to multi-year highs. The quarter ended
with a flatter yield curve with the 2s/10s spread
tightening to 47bps. The catalysts for the curve
change included nearly $530B in Treasury issuance,
repatriation of short-term debt, concerns regarding
trade policy, and tightening monetary policy. Global
fixed income markets experienced strong
performance in Q1 with strength driven by Japan,
peripheral Europe and emerging markets. In Japan,
expectations for prolonged yield curve control
resurfaced with the reappointment of BOJ Governor
Kuroda. Sovereign debt in peripheral Europe showed
resilience following the Italian elections in March. The
supportive macroeconomic backdrop of synchronized
global growth, higher commodity prices and muted
inflation helped emerging market debt deliver strong
performance.
Taxable Bonds: US fixed income markets took it on
the chin in Q1 with IG corporate debt taking the brunt
of the pain, down 2.3% in Q1. Short dated T-Bills
(0.3%) and Leveraged Loans (0.0%) led the asset
class this past quarter driven by their inherent shorter
duration and floating rate component. Performance by
credit quality was a bit mixed as A-rated issues
lagged relative to AA and BBB-rated debt.
Municipal Bonds: Municipal bonds outperformed
their taxable peers delivering -1.1% this past quarter.
As expected, year-to-date issuance has dropped
relative to 2017, enhancing the positive technical
environment. The increase in rates spilled over to the
muni market in Q1 but investors remained content
with underlying credit risk as high yield municipals
were the best performing sector in Q1 returning 0.6%.
Domestic Equity
At a Glance: For the first time in three years, the
S&P 500 posted a negative return of -0.8% for the
quarter. The market got off to a strong start in
January, but volatility became the theme for the rest
of the period. Market selloffs were sparked by
increased expectations of tightening by the Fed, fears
of an imminent trade war particularly between the US
and China, and company-specific issues with some of
the “FANG” stocks sent markets lower.
Market Cap and Style: Among market cap
segments, small-cap equities outperformed mid- and
large-cap stocks while growth continued to gain
ground relative to value during the quarter.
Sector: Even with the recent selloff in some of the
most well-known growth names, the only two sectors
that posted a positive return during the quarter were
Information Technology (+3.5%) and Consumer
Discretion (+3.1%). Contrasting were the income-
oriented sectors of Telecom (-7.5%) and Consumer
Staples (-7.1%), while the cyclical sectors also saw
drops: Energy (-5.9%) and Materials (-5.5%).
International Equity
At a Glance: International equities were mixed in Q1,
with emerging markets up 1.4% while developed
markets fell 1.5%. Economic data in Europe
continued to indicate expansion though concerns
flared up that the economy may have already peaked.
Uncertainty in leadership, monetary policy, and
potential tariffs put pressure on the European markets
with Germany (-3.6%), the UK (-3.9%), and Spain (-
1.6%) seeing losses for the quarter. Select emerging
markets saw positive returns, with China up 1.8%,
Russia up 9.4%, and Brazil returning 12.6% following
an increased likelihood for a market-friendly election
later this year. On the flipside, India suffered a 7%
drop in the quarter.
Robert W. Baird & Co. Member SIPC. 5
Markets at a Glance
As of March 31, 2018
Source: Morningstar Direct; Russell, MSCI, Barclays, Citigroup, and Dow Jones benchmarks. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
Asset Class Last Qtr YTD 1-Year 3-Year 5-Year 10-Year 2017 2016 2015 Benchmark
U.S. Stocks
Large Cap Value (2.8) (2.8) 6.9 7.9 10.8 7.8 13.7 17.3 (3.8) Russell 1000® Value
Large Cap Grow th 1.4 1.4 21.3 12.9 15.5 11.3 30.2 7.1 5.7 Russell 1000® Growth
Mid Cap (0.5) (0.5) 12.2 8.0 12.1 10.2 18.5 13.8 (2.4) Russell Midcap®
Small Cap (0.1) (0.1) 11.8 8.4 11.5 9.8 14.6 21.3 (4.4) Russell 2000®
International Stocks
Developed Markets (1.5) (1.5) 14.8 5.6 6.5 2.7 25.0 1.0 (0.8) MSCI EAFE (Net)
Bonds
Short-Term Taxable (0.2) (0.2) 0.2 0.7 0.8 1.6 0.8 1.3 0.7 BBgBarc 1-3 Yr Govt/Credit
Intermediate-Term Taxable (1.0) (1.0) 0.4 0.9 1.2 2.9 2.1 2.1 1.1 BBgBarc Intermed. Govt/Credit
Short-Term Municipal 0.3 0.3 0.6 0.7 0.8 1.6 1.1 0.2 0.8 BBgBarc 1-3 Yr Municipal
Intermediate-Term Municipal (1.2) (1.2) 1.3 1.6 2.1 4.0 4.5 (0.5) 3.3 BBgBarc 7 Yr Municipal
Cash
Cash/Cash Equivalents 0.4 0.2 1.1 0.5 0.3 0.3 0.9 0.3 0.1 Citi 3 Month T-bills
Satellite
High Yield (0.9) (0.9) 3.7 5.2 5.0 8.1 7.5 17.5 (4.6) BofA/ML High Yield Master II
Real Estate (5.9) (5.9) 0.1 2.9 6.3 6.4 9.8 7.6 2.1 DJ US REIT
Commodities (0.4) (0.4) 3.7 (3.2) (8.3) (7.7) 1.7 11.8 (24.7) Bloomberg Commodity
Emerging Markets 1.4 1.4 24.9 8.8 5.0 3.0 37.3 11.2 (14.9) MSCI Emerging Mkts (Net)
Trailing Returns (%) Annual Returns (%)
Robert W. Baird & Co. Member SIPC. 6
0%0%
-1%
4%3%
-1% -1%-2%
-3%
-5%-6%
-6%
-7%-7%
1%0%
-1%
-4%-4% -4%
-6%
-7%
12%
9%
6%
2%
1%
0%
-4%
-7%
1%
-1% -1% -1% -1% -1% -1%
-2%
-10%
-5%
0%
5%
10%
15%
Returns by Asset Class
As of March 31, 2018
Source: Morningstar Direct. Asset classes are represented by the following benchmarks: Large Cap (S&P 500), Mid Cap (Russell Mid Cap), Small Cap (Russell 2000), Cons. Discretionary (S&P 500 Sectors/Consumer Discretionary), Cons. Staples (S&P 500 Sectors/Consumer Staples), Energy (S&P 500 Sectors/Energy), Financials (S&P 500 Sectors/Financials), Health Care (S&P 500 Sectors/Health Care), Industrials (S&P 500 Sectors/Industrials), Info. Technology (S&P 500 Sectors/Info. Technology), Materials (S&P 500 Sectors/Materials), Telecom. (S&P 500 Sectors/Telecommunications), Utilities (S&P 500 Sectors/Utilities), Real Estate (S&P 500 Sectors/Real Estate), Australia ((MSCI Australia), Canada (MSCI Canada), France (MSCI France), Germany (MSCI Germany), Japan ((MSCI Japan), Switzerland ((MSCI Switzerland), United Kingdom (MSCI United Kingdom), United States (S&P 500), Brazil (MSCI Brazil), China (MSCI China), India (MSCI India), Korea (MSCI Korea), Mexico (MSCI Mexico), Russia (MSCI Russia), South Africa (MSCI South Africa), Taiwan (MSCI Taiwan), Agency (BBgBarc US Agency), Broad Market (BBgBarc US Agg. Bond), Corporate (BBgBarc US Corporate IG), High Yield (BBgBarc US Corporate HY), Municipal (BBgBarc Municipal), TIPS (BBgBarc US Treasury US TIPS), Treasury (BBgBarc US Treasury)
Year-to-Date Performance of Various Asset Classes
Market Cap
U.S. Sectors
International Markets
Emerging Markets
Fixed Income
Robert W. Baird & Co. Member SIPC. 7
2,500
2,550
2,600
2,650
2,700
2,750
2,800
2,850
2,900
Jan-18 Feb-18 Mar-18
Ad
just
ed
Clo
sin
g L
eve
lS&P 500 Index
As of March 31, 2018
Source: Standard and Poor’s. The S&P 500 Index, computed by the Standard & Poor's Corporation, is a well known gauge of stock market movements determined by the weighted capitalization of the 500 leading U.S. common stocks. Indices are unmanaged and it is not possible to invest directly in an index.
Year-to-Date Performance of the S&P 500 Index
Q1: -0.8%
Robert W. Baird & Co. Member SIPC. 8
Economic Growth
As of December 31, 2017
Source: US Department of Commerce: Bureau of Economic Analysis (GDP Growth)
Gross Domestic
Product (GDP)
GDP is a basic measure of
U.S. economic output.
Alternatively, it can be
thought of as the final value
of all goods and services
produced within the U.S.
Positive GDP growth signals
an expanding economy.
GDP is comprised of four
major categories: personal
consumption, private
investment, government
spending and net exports.
US GDP Growth
Contribution to U.S. GDP Growth
-10
-8
-6
-4
-2
0
2
4
6
8
10
Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16
GD
P G
row
th (%
)
-10
-8
-6
-4
-2
0
2
4
6
8
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Co
ntr
ibuti
on
to
GD
P G
row
th (%
)
Personal Consumption Private Investment
Govt. Spending Next Exports
Robert W. Baird & Co. Member SIPC. 9
Inflation Watch
As of February 28, 2018
Source: Bureau of Labor Statistics; Baird Analysis. CPI figures lag one month.
Consumer Price Index
(CPI)
A common measure of
inflation, Headline CPI tracks
a broad basket of goods and
services relatable to most
consumers. Core CPI
excludes Food and Energy
due to the volatile nature of
those categories and the
distortive effect it can have
on the broader inflation
measure.
Historic CPI Level
-2
0
2
4
6
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Ye
ar-
Ove
r-Y
ear C
hang
e in
CP
I Headline CPI
Core CPI
Components Weight (%) 12-mo Change (%) Components Weight (%) 12-mo Change (%)
Headline CPI 100 2.2 Core CPI 79 1.8
Housing 42 2.8 Food 13 1.4
Transportation 17 4.1 Energy 8 7.7
Food & Beverage 14 1.4
Medical Care 9 1.8
Education/Communication 7 (1.8)
Recreation 6 0.6
Apparel/Clothing 2 0.6
Other 3 2.4
Headline CPI Core CPI: Headline less Food and Energy
Robert W. Baird & Co. Member SIPC. 10
4.1
8.2
0
3
6
9
12
15
18
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Un
em
plo
ym
en
t R
ate
(%
)
U-3 Unemployment Rate
U-6 Underemployment Rate
-1,000
-800
-600
-400
-200
0
200
400
600
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Ch
an
ge i
n P
ay
roll
(0
00s
)
63.0
60
61
62
63
64
65
66
67
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Part
icip
ati
on
Rate
(%
)
Jobs Market
As of February 28, 2018
Source: US Department of Labor: Bureau of Labor Statistics. Data will lag one month and is subject to revision. Wage growth is calculated quarterly and will lag one quarter.
Jobs Gained/Lost Unemployment and Underemployment Rates
Labor Force Participation Wage Growth (y/o/y%)
2.8
0
1
2
3
4
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Wag
e G
rro
wth
(%
)
Robert W. Baird & Co. Member SIPC. 11
$125,000
$175,000
$225,000
$275,000
$325,000
$375,000
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Median Price (New Homes)
Median Price (Exist ing)
Housing Market
As of February 28, 2018
Source: Standard & Poor’s, US Department of Commerce: Bureau of Economic Analysis.
Consumer Price Index
(CPI)
A common measure of
inflation, Headline CPI tracks
a broad basket of goods and
services relatable to most
consumers. Core CPI
excludes Food and Energy
due to the volatile nature of
those categories and the
distortive effect it can have
on the broader inflation
measure.
S&P/Case Shiller Home Price Index (20 City) Average Selling Price of New and Existing Homes
Housing Affordability Index Home Starts/Sales
100
120
140
160
180
200
220
240
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Ind
ex
Le
ve
l
80
100
120
140
160
180
200
220
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Ind
ex
Le
ve
l
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Un
its (00
0s
)
New Housing Starts
Existing Home Sales
Robert W. Baird & Co. Member SIPC. 12
Consumer Health
As of February 28, 2018
Source: Thomas Reuters/University of Michigan, US Department of Commerce: Bureau of Economic Analysis.
Consumer Price Index
(CPI)
A common measure of
inflation, Headline CPI tracks
a broad basket of goods and
services relatable to most
consumers. Core CPI
excludes Food and Energy
due to the volatile nature of
those categories and the
distortive effect it can have
on the broader inflation
measure.
University of Michigan Consumer Sentiment Survey Consumer Spending Growth (y/o/y%)
Personal Savings Rate Personal Income Per Capita
50
60
70
80
90
100
110
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Ind
ex L
eve
l
-4
-2
0
2
4
6
8
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Co
ns
um
er
Sp
en
din
g G
row
th (
%)
$32,000
$34,000
$36,000
$38,000
$40,000
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
0
2
4
6
8
10
12
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Pe
rso
na
l S
av
ing
s R
ate
(%
)
Robert W. Baird & Co. Member SIPC. 13
Corporate Profitability
Source: BEA, Bloomberg, Standard & Poors, Baird analysis. Past performance is not a guarantee of future results.
Corporate Profitability
Earnings power ultimately
drives long-term changes to
stock prices. These two
charts display how profitable
US corporations are. The
top chart measures earnings
(top line growth) and
revenue (bottom line growth)
of the companies within the
S&P 500 Index. The bottom
chart displays corporate
profitability (after taxes) in
terms of total US GDP
growth.
S&P 500 Earnings Per Share (EPS)
$0
$20
$40
$60
$80
$100
$120
$140
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Earnings Per Sh (right axis)
Revenues Per Sh (left axis)
Corporate Profits (% of GDP)
3%
6%
9%
12%
Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Dec-17
Co
rpo
rate
Pro
fits
/G
DP
As of December 31, 2017
Robert W. Baird & Co. Member SIPC. 14
0%
20%
40%
60%
80%
Q1
20
08
Q2
20
08
Q3
20
08
Q4
20
08
Q1
20
09
Q2 2
00
9
Q3 2
00
9
Q4
20
09
Q1
20
10
Q2
20
10
Q3
20
10
Q4
20
10
Q1 2
01
1
Q2 2
01
1
Q3
20
11
Q4
20
11
Q1
20
12
Q2
20
12
Q3
20
12
Q4 2
01
2
Q1 2
01
3
Q2
20
13
Q3
20
13
Q4
20
13
Q1
20
14
Q2
20
14
Q3 2
01
4
Q4 2
01
4
Q1
20
15
Q2
20
15
Q3
20
15
Q4
20
15
Q1
20
16
Q2 2
01
6
Q3 2
01
6
Q4
20
16
Q1
20
17
Q2
20
17
Q3
20
17
Q4
20
17
Q1 2
01
8
Pe
rc
en
t o
f T
ra
din
g D
ay
s
% of days up/down 2% or more
% of days up/down 1-2%
Market Volatility
Source: Standard & Poor’s; CBOE; Baird Analysis.
VIX (CBOE
Volatility Index)
The VIX measures the
implied volatility of S&P 500
future options. Simply put, it
measures the expected
volatility of the S&P 500
Index over the next 30 days.
The higher the index, the
higher the expected volatility.
It is also commonly referred
to as the “fear index.”
Historic VIX Level
Quarterly S&P 500 Trading Volatility
As of March 31, 2018
0
10
20
30
40
50
60
70
80
90
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
VIX
Le
ve
l
Robert W. Baird & Co. Member SIPC. 15
Commodity Markets
As of March 31, 2018
Source: U.S. Dept of Energy; London PM Gold Fix Index; Baird Analysis. “Broad Market” is represented by the Bloomberg Commodity Index, specific commodity types are reported segments of that index. See important disclosures and definitions included with this publication.
Year-to-Date Returns of Various Commodity Types (%)
Oil Prices Gold Prices
-0.4
8.8
1.80.9
-6.8 -6.2
-8.6
-12.0
1.0
-0.5
-5.2
8.77.9
3.2 3.1
-10.0
-15
-10
-5
0
5
10
$1,324
$0
$500
$1,000
$1,500
$2,000
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Lo
nd
on
PM
Go
ld ($
/oz)
$65
$0
$20
$40
$60
$80
$100
$120
$140
$160
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
WT
I O
il P
ric
e (
$/b
bl)
Robert W. Baird & Co. Member SIPC. 16
Energy Markets
As of March 31, 2018
Source: U.S. Energy Information Administration; Bloomberg; Baird Analysis.
Total U.S. Oil Production (LH) and Rig Count Index (RH) Global Oil Supply and Demand (LH) and Supply Imbalance (RH)
$64.94
$0
$20
$40
$60
$80
$100
$120
$140
$160
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
WTI
Oil
Pri
ce ($/b
)
0
500
1,000
1,500
2,000
2,500
3,500
4,500
5,500
6,500
7,500
8,500
9,500
10,500
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Ba
ke
r H
ug
he
s O
il &
Ga
s R
ig C
ou
nt
To
tal
U.S
. O
il P
rod
uc
tio
n (m
mb
b/d
)
Total Oil Production
Total Active Rig Count
Oil Prices (West Texas Intermediate)
-4
-3
-2
-1
0
1
2
3
4
75
80
85
90
95
100
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Su
pp
ly / D
em
an
d Im
bala
nces (
MM
bb
/d)
Glo
bal
Oil
Su
pp
ly a
nd
Dem
an
d (
MM
bb
/d)
Global Over/Under Supply
Supply
Demand
Un
ders
up
ply
O
vers
up
ply
Natural Gas Prices (Henry Hub)
$2.73
$0
$2
$4
$6
$8
$10
$12
$14
$16
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
He
nry
Hu
b N
atu
ral G
as
Pri
ce ($
/mm
btu
)
Robert W. Baird & Co. Member SIPC. 17
Mutual Fund and ETF Flows
Source: Morningstar Direct; Baird Analysis. Asset classes with less than $25 billion invested were excluded from the analysis.
Annual Fund Flows
The examination of annual
mutual fund and ETF flows
shows the investment
pattern of the average
investor by broad asset
class. For example, in 2008
investors exited stocks when
the markets fell. In 2009,
large amounts of capital
went to fixed income, but
little flowed back to stocks.
Annual Mutual Fund and ETF Flows ($ millions)
As of December 31, 2017
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Money Market 613,001 (290,490) (431,604) (60,745) 23,827 40,622 24,080 52,648 84,147 110,049
Municipal Bond 12,758 75,969 16,043 (8,574) 54,251 (56,361) 32,748 21,822 33,533 34,663
Taxable Bond 61,001 333,826 246,664 190,178 329,181 34,920 110,193 29,820 199,509 393,331
Allocation (21,999) 6,453 18,527 19,307 29,553 61,961 51,267 (20,669) (51,899) (19,726)
US Equity 709 (33,563) (21,054) (45,395) (41,163) 175,444 127,309 (60,053) (8,997) 28,196
International Equity (41,542) 63,246 91,729 19,051 61,056 200,740 153,487 209,444 12,420 246,847
Alternative 19,820 28,434 24,006 23,172 17,902 49,512 20,076 20,516 (296) 7,097
Commodities 12,370 36,636 24,972 8,171 11,928 (32,890) (3,317) (1,526) 14,456 2,354
Calendar Year Net Flows ($M)
Top 10 In-Flows Trailing 1-Year Top 10 Out-Flows Trailing 1-Year
(as a % of assets) Growth Rate (as a % of assets) Growth Rate
Long Government 50.3% High Yield Bond -11.1%
Ultrashort Bond 35.4% Utilities -9.1%
Europe Stock 26.0% Consumer Cyclical -8.1%
Foreign Small/Mid Blend 20.8% Allocation--85%+ Equity -6.9%
Multisector Bond 17.8% Health -6.5%
Emerging Markets Bond 17.3% Mid-Cap Value -5.8%
World Bond 17.2% Allocation--70% to 85% Equity -4.7%
Nontraditional Bond 16.6% Equity Energy -4.6%
Foreign Large Blend 16.5% Large Grow th -3.3%
Financial 15.2% World Allocation -3.3%
Biggest % Gainers/Losers by Asset Class
Robert W. Baird & Co. Member SIPC. 18
Fund Flow Heat Map
Source: Morningstar Direct; Baird Analysis.
As of December 31, 2017
Asset Class 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US Equity
Large Cap Grow th 0.1% -1.1% -1.8% -3.7% -2.9% -3.7% -1.3% -1.6% -0.9% -7.3% -3.9%
Large Cap Blend 2.7% 5.3% -0.6% 0.0% 0.8% 1.9% 6.3% 7.0% -0.2% 4.4% 4.1%
Large Cap Value 0.1% -2.3% -4.8% 0.6% 0.3% 0.2% 5.0% 3.0% -2.5% 1.6% -2.0%
Mid Cap Grow th 8.2% -5.2% -2.0% -1.0% -5.6% -3.8% 2.3% -4.0% -2.5% -9.1% -3.0%
Mid Cap Blend 4.1% -0.9% 5.3% 4.3% -1.0% 4.0% 16.5% 7.6% 6.8% 2.3% 2.4%
Mid Cap Value -2.7% -7.7% -1.4% 2.0% -0.2% -5.3% 5.7% 0.3% -4.3% -1.0% -4.3%
Small Cap Grow th -2.4% -2.4% 4.3% 0.3% -0.4% -3.7% 4.5% -7.2% -2.7% -6.2% -2.1%
Small Cap Blend -1.9% 2.6% 5.2% 2.7% -4.0% -3.5% 9.0% 1.5% 0.5% 5.9% 2.2%
Small Cap Value -2.2% 7.5% 4.4% 8.5% -2.8% -4.0% 5.0% -0.6% -0.1% 6.3% 0.4%
International Equity
Internationl Grow th 7.5% -3.2% 1.8% -3.2% -6.0% -2.6% 6.2% 5.0% 6.6% -1.8% 2.7%
International Blend 22.7% 1.2% 8.8% 13.3% 6.7% 4.0% 15.6% 11.6% 19.9% 7.9% 16.6%
International Value 5.0% -8.2% -4.7% 1.7% 6.1% 7.9% 14.7% 10.7% -0.2% -1.5% 4.9%
Emerging Markets 19.4% 3.6% 32.5% 27.6% 7.0% 19.0% 9.2% 3.3% -0.6% 6.0% 14.3%
Global Equity 8.8% -4.7% -5.4% -3.3% -3.1% -5.2% 5.8% 3.0% -0.3% -4.8% 0.0%
Fixed Income
Short-Term Bond 1.4% -3.5% 70.4% 29.4% 9.4% 17.5% 11.8% 6.2% -0.7% 4.1% 8.9%
Intermediate-Term Bond 15.8% 2.6% 27.2% 9.5% 4.8% 12.6% -7.7% 4.7% 4.4% 10.5% 12.7%
High Yield Bond 3.3% 3.9% 28.9% 11.5% 10.5% 16.1% 0.4% -4.8% -2.6% 7.3% -5.5%
Bank Loan -9.9% -24.9% 44.3% 81.3% 33.5% 24.2% 93.6% -13.8% -16.5% 10.2% 11.7%
TIPS 6.5% 39.2% 56.3% 10.1% 10.6% 5.4% -22.6% -2.1% 3.7% 14.4% 15.6%
Short-Term Muni 4.4% 25.5% 106.1% 10.6% 4.4% 11.9% 4.6% 7.6% -1.8% 3.0% 4.0%
Intermediate-Term Muni 9.1% 8.8% 23.3% 7.1% 2.7% 14.5% -7.1% 13.4% 12.3% 10.4% 10.6%
High Yield Muni 1.3% -5.3% 27.9% 5.2% -1.3% 22.8% -15.0% 17.1% 5.2% 5.4% 11.4%
>10% 5% to 10% 3% to 5% 3% to 0% 0% to -3% -3% to -5% -5% to -10% <-10%
Mutual Fund and ETF Net Flow (YoY % Growth)
Robert W. Baird & Co. Member SIPC. 20
U.S. Stock Market Snapshot
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of March 31, 2018
Representative
Last Qtr YTD 1-Year 3-Year 5-Year 10-Year Std. Dev. Max. Loss P/E EPS Gr. Div. Yld. Benchmark
2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0
Bellwethers
S&P 500 (0.8) (0.8) 14.0 10.8 13.3 9.5 9.5 (8.4) 17.4 11.8 2.0 S&P 500
DJIA (2.0) (2.0) 19.4 13.5 13.3 9.9 10.2 (9.0) 17.0 12.5 2.3 Dow Jones Industrial Avg.
Market Cap
Mega (1.9) (1.9) 13.1 11.7 13.0 8.9 10.3 (8.4) 17.5 11.3 2.1 Russell Top 50
Large (0.8) (0.8) 14.7 11.4 13.6 9.4 10.0 (8.6) 17.5 11.6 2.0 Russell Top 200
Mid (0.5) (0.5) 12.2 8.0 12.1 10.2 10.3 (12.8) 17.7 12.5 1.7 Russell Midcap
Small (0.1) (0.1) 11.8 8.4 11.5 9.8 13.8 (16.8) 17.3 12.3 1.5 Russell 2000
Micro 0.7 0.7 13.5 8.0 11.8 9.2 15.0 (21.0) 15.5 13.4 1.2 Russell Micro Cap
Style
Value (2.8) (2.8) 6.8 7.9 10.7 7.8 10.2 (10.4) 15.0 10.6 2.5 Russell 3000 Value
Core (0.6) (0.6) 13.8 10.2 13.0 9.6 10.0 (8.8) 17.5 11.9 1.9 Russell 3000
Grow th 1.5 1.5 21.1 12.6 15.3 11.3 10.5 (8.8) 20.8 13.4 1.3 Russell 3000 Growth
S&P 500 Sectors
Consumer Discretionary 3.1 3.1 16.9 12.2 15.7 14.6 11.6 (8.0) 21.1 14.4 1.3 S&P 500/Cons. Disc.
Consumer Staples (7.1) (7.1) (0.9) 5.4 8.6 9.5 10.4 (8.6) 16.5 9.4 3.0 S&P 500/Cons. Staples
Energy (5.9) (5.9) (0.2) (1.2) (0.4) 1.3 16.6 (38.7) 19.2 31.0 3.0 S&P 500/Energy
Financials (1.0) (1.0) 18.0 14.3 15.5 5.2 13.5 (15.2) 13.9 10.4 1.8 S&P 500/Financials
Health Care (1.2) (1.2) 11.3 5.6 13.9 12.2 11.8 (13.1) 15.9 10.8 1.7 S&P 500/Health Care
Industrials (1.6) (1.6) 14.0 11.7 14.0 8.9 11.3 (11.3) 18.0 11.9 2.0 S&P 500/Industrials
Information Technology 3.5 3.5 27.7 19.9 20.6 14.2 12.5 (8.2) 19.4 12.7 1.2 S&P 500/Info. Tech.
Materials (5.5) (5.5) 10.5 7.4 9.9 5.9 14.3 (22.7) 17.3 12.0 2.0 S&P 500/Materials
Telecomm (7.5) (7.5) (4.9) 4.7 4.1 5.8 14.6 (13.8) 10.6 4.3 5.6 S&P 500/Telecomm
Utilities (3.3) (3.3) 1.9 8.2 9.2 7.1 13.8 (12.7) 16.0 6.1 3.9 S&P 500/Utilities
Trailing Returns (%) 5-Year Risk Stats Other Metrics
Robert W. Baird & Co. Member SIPC. 21
-0.8-0.5
-0.1
-2.8
1.4
-2.5
2.2
-2.6
2.3
-0.8-0.5
-0.1
-2.8
1.4
-2.5
2.2
-2.6
2.3
-5
0
5
Large Cap Mid Cap Small Cap LargeValue
LargeGrowth
MidValue
MidGrowth
SmallValue
SmallGrowth
Re
turn
(%
)
Last Quarter Year-to-Date
Domestic Asset Class Performance
Source: Morningstar Direct. Asset classes are represented by the following benchmarks: S&P 500 (Large Cap), Russell Midcap® (Mid Cap), Russell 2000® (Small Cap), Russell 1000 Value® (Large Value), Russell 1000 Growth® (Large Growth), Russell Midcap Value® (Mid Value), Russell Midcap Growth® (Mid Growth), Russell 2000 Value® (Small Value), and Russell 2000 Growth® (Small Growth). See important disclosures and definitions included with this publication.
As of March 31, 2018
Performance by Market Cap and Style
Robert W. Baird & Co. Member SIPC. 22
-7.5
-7.1
-5.9
-5.5
-3.3
-1.6
-1.2
-1.0
-0.8
3.1
3.2
3.5
-10 -5 0 5
Telecomm
Cons. Staples
Energy
Materials
Utilities
Industrials
Health Care
Financials
S&P 500
Cons. Disc.
Real Estate
Info. Tech.
Return (%)
-7.5
-7.1
-5.9
-5.5
-5.0
-3.3
-1.6
-1.2
-1.0
-0.8
3.1
3.5
-10 -5 0 5
Telecomm
Cons. Staples
Energy
Materials
Real Estate
Utilities
Industrials
Health Care
Financials
S&P 500
Cons. Disc.
Info. Tech.
Return (%)
Domestic Asset Class Performance
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of March 31, 2018
S&P 500 Index: Performance by Sector (Latest Quarter)
S&P 500 Index: Performance by Sector (YTD)
P/E Ratio
(TTM)
P/E Ratio
(NTM)
Dividend
Yield (%)
EPS Growth
(%)
S&P 500 Index 21.8 17.4 2.0 11.8
Consumer Discretionary 20.8 21.1 1.3 14.4
Consumer Staples 19.7 16.5 3.0 9.4
Energy 20.3 19.2 3.0 31.0
Financials 16.8 13.9 1.8 10.4
Health Care 26.4 15.9 1.7 10.8
Industrials 21.5 18.0 2.0 11.9
Info. Tech. 31.4 19.4 1.2 12.7
Materials 23.6 17.3 2.0 12.0
Real Estate 34.7 38.3 3.7 7.1
Telecomm 7.3 10.6 5.6 4.3
Utilities 17.0 16.0 3.9 6.1
S&P 500 Sector Statistics
Robert W. Baird & Co. Member SIPC. 23
Investment Style Leadership
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of March 31, 2018
Large Cap vs. Small Cap (Rolling 12-Month Periods)
-20
-15
-10
-5
0
5
10
15
20
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
12-M
o P
erf
orm
an
ce
Dif
fere
nti
al
(%)
Large Cap Outperforms
Small Cap Outperforms
Value vs. Growth (Rolling 12-Month Periods)
-20
-15
-10
-5
0
5
10
15
20
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
12
-Mo
Pe
rfo
rma
nc
e D
iffe
ren
tia
l (%
)
Defensive vs. Cyclical (Rolling 12-Month Periods)
-40
-30
-20
-10
0
10
20
30
40
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
12
-Mo
Perf
orm
an
ce D
iffe
ren
tial (%
)
Value Outperforms
Growth Outperforms
Defensive Outperforms
Cyclical Outperforms
Robert W. Baird & Co. Member SIPC. 24
21.8
5
10
15
20
25
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
P/E
Rati
o (TT
M)
S&P 500 P/E 10-Year Average P/E
Average +1 Std. Dev. Average -1 Std. Dev.
20.2
5
10
15
20
25
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
P/E
Ra
tio
(T
TM
)
Mid Cap 10-Year Average P/E
Average +1 Std. Dev. Average -1 Std. Dev.
21.4
5
10
15
20
25
30
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
P/E
Rati
o (
TT
M)
Small Cap 10-Year Average P/E
Average +1 Std. Dev. Average -1 Std. Dev.
Historical Market Cap Valuations
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of March 31, 2018
S&P 500 Valuation History
Mid Cap Valuations History Small Cap Valuation History
Robert W. Baird & Co. Member SIPC. 25
Historical Sector Valuation and Growth Ranges
Source: Morningstar Direct. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of March 31, 2018
S&P 500 Sectors: 10-Year P/E Valuation Range
S&P 500 Sectors: 10-Year Earnings Growth Range
21.1
16.5
19.2
13.915.9
18.019.4
17.3
10.6
16.0
0
5
10
15
20
25
30
35
40
45
50
Cons. Disc. Cons. Staples Energy Financials Health Care Industrials Info Tech Materials Telecomm Utilities
P/E
Ra
tio
10-Year Low
10-Year High
Current
Average
LEGEND
14.4
9.4
31.0
10.4 10.811.9 12.7 12.0
4.36.1
0
5
10
15
20
25
30
35
Cons. Disc. Cons. Staples Energy Financials Health Care Industrials Info Tech Materia ls Telecomm Utilities
LT
Ea
rnin
gs
Gro
wth
Robert W. Baird & Co. Member SIPC. 26
Mutual Fund Over/Under Performance (Equity Funds)
Mutual Fund Style Universe: Style-specific universe of mutual funds as categorized by Morningstar. Number of funds in each category as of June 2017: 362 for Large Growth, 298 for Large Value, 178 for Mid Growth, 103 for Mid Value, 205 for Small Growth, 109 for Small Value, 154 for International, and 213 for Global. Source: Morningstar Direct; S&P 500, MSCI, and Russell benchmarks; Baird Analysis. See important disclosures and definitions included with this publication.
Mutual Fund
Performance
Active investment managers
often have a primary
objective of outperforming a
relevant market benchmark
based on the fund’s
investment style. In certain
periods, active managers
can find it easier or more
difficult to outperform.
This chart examines seven
main assets classes,
detailing what percentage of
mutual fund managers over-
or under-performed in a
given period. This provides
useful context when
assessing mutual funds that
you may own.
Percent of Funds Outperforming Market Benchmarks (Trailing 1 Year)
As of March 31, 2018
45%
75%
40%
56%44%
62% 64%
44%
0%
25%
50%
75%
100%
LargeGrowth
LargeValue
MidGrowth
MidValue
SmallGrowth
SmallValue
Int'l Global
Pe
rce
nt o
f T
ota
l
% Underperform
% Outperform
Percent of Funds Outperforming Market Benchmarks (Trailing 5 Years)
24%
42%
25% 28%34%
43% 46% 50%
0%
25%
50%
75%
100%
LargeGrowth
LargeValue
MidGrowth
MidValue
SmallGrowth
SmallValue
Int'l Global
Pe
rce
nt o
f T
ota
l
% Underperform
% Outperform
Robert W. Baird & Co. Member SIPC. 28
Global Market Performance
Source: Standards & Poor’s (S&P 500); MSCI benchmarks (country returns). All performance is measured in USD. See important disclosures and definitions included with this publication.
As of March 31, 2018
Year-to-Date Performance
S&P 500
-0.8%
Canada
-7.2%
Mexico
0.9%
UK
-3.9%
France
0.4%
Spain
-1.7%
Germany
-3.5%
Brazil
12.5%
Japan
1.0%
Hong Kong
-1.4%
China
1.8%
India
-7.0%
Australia
-6.1%
South Africa
-4.0%
Europe
-1.9% Russia
9.4%
Robert W. Baird & Co. Member SIPC. 29
International Equity Snapshot
Source: Morningstar Direct; MSCI benchmarks. Performance greater than one year is annualized. Performance is represented by the benchmark listed in the “representative benchmark” column. See important disclosures and definitions included with this publication.
As of March 31, 2018
Asset Class/Region Last Qtr YTD 1-Year 3-Year 5-Year 10-Year 2017 2016 2015 Benchmark
Broad Developed Markets
Developed Markets (USD) (1.5) (1.5) 14.8 5.6 6.5 2.7 25.0 1.0 (0.8) MSCI EAFE (Net) USD
Developed Markets (Local Currency) (4.3) (4.3) 5.3 3.4 8.5 4.5 15.2 5.3 5.3 MSCI EAFE (Net) Local
Currency Effect (USD - Local Returns) 2.7 2.7 9.5 2.2 (2.0) (1.8) 9.8 (4.3) (6.1)
Broad Emerging Markets
Emerging Markets 1.4 1.4 24.9 8.8 5.0 3.0 37.3 11.2 (14.9) MSCI Emerging Markets (Net)
BRIC 2.2 2.2 30.1 11.0 6.6 2.1 42.0 12.4 (13.3) MSCI BRIC
Returns by Style
Value (2.0) (2.0) 12.2 4.3 5.8 2.0 21.4 5.0 (5.7) MSCI EAFE Value
Grow th (1.0) (1.0) 17.5 6.7 7.1 3.4 28.9 (3.0) 4.1 MSCI EAFE Growth
Large Cap (1.6) (1.6) 13.9 4.9 5.9 2.4 24.0 1.1 (2.1) MSCI EAFE Large Cap
Mid Cap (1.4) (1.4) 18.1 8.2 9.0 4.1 29.0 0.7 4.4 MSCI EAFE Mid Cap
Small Cap 0.2 0.2 23.5 12.3 11.1 6.5 33.0 2.2 9.6 MSCI EAFE Small Cap
Returns by Region
Europe (1.9) (1.9) 15.1 5.4 7.0 2.7 26.2 0.2 (2.3) MSCI Europe
Japan 1.0 1.0 20.0 8.7 9.3 4.3 24.4 2.7 9.9 MSCI Japan
Pacif ic (ex Japan) (3.7) (3.7) 8.6 5.2 3.4 4.8 26.0 8.0 (8.4) MSCI Pacific ex Japan
Trailing Returns (%) Annual Returns (%)
Robert W. Baird & Co. Member SIPC. 30
International Country Performance
Source: Morningstar Direct.; MSCI Indices; Baird Analysis. All returns are reported in USD. MSCI EAFE (Developed markets) and MSCI EM (Emerging markets) are broad benchmarks representing many countries. Includes the 10 largest countries by weighting in the benchmark. See important disclosures and definitions included with this publication.
As of March 31, 2018
Selected Country Performance (Latest Quarter) Selected Country Performance (Year to Date)
-7.1
-7.0
-4.0
-0.4
0.9
1.4
1.8
5.7
8.5
9.4
12.5
-6.1
-3.9
-3.9
-3.5
-1.9
-1.6
-1.5
0.4
1.0
1.0
5.4
-10 -5 0 5 10 15
Indonesia
India
South Africa
South Korea
Mexico
MSCI Em. Mkts
China
Taiwan
Malaysia
Russia
Brazil
Australia
Switzerland
U.K.
Germany
Sweden
Spain
MSCI EAFE
France
Japan
Netherlands
Italy
Return (%)
Em
erg
ing
Mark
ets
D
ev
elo
ped
Mark
ets
-7.1
-7.0
-4.0
-0.4
0.9
1.4
1.8
5.7
8.5
9.4
12.5
-6.1
-3.9
-3.9
-3.5
-1.9
-1.6
-1.5
0.4
1.0
1.0
5.4
-10 -5 0 5 10 15
Indonesia
India
South Africa
South Korea
Mexico
MSCI Em. Mkts
China
Taiwan
Malaysia
Russia
Brazil
Australia
Switzerland
U.K.
Germany
Sweden
Spain
MSCI EAFE
France
Japan
Netherlands
Italy
Return (%)
Robert W. Baird & Co. Member SIPC. 31
Financials23.6
Industrials11.9
Cons. Disc.11.5
Cons. Staples9.2
Info. Tech.11.8
Health Care7.6
Materials8.2
Energy6.6
Telecomm3.9
Utilities2.8
Real Estate3.1
-4.1
-2.9
-2.8
-1.8
-1.6
-1.2
-1.1
-1.0
-0.3
1.2
1.8
-5 0 5
Telecomm
Materials
Cons. Staples
Energy
Industrials
MSCI ACWI ex US
Financials
Cons. Disc.
Health Care
Utilities
Info. Tech.
Return (%)
-4.1
-2.9
-2.8
-1.8
-1.6
-1.2
-1.1
-1.0
-0.3
1.2
1.8
-5 0 5
Telecomm
Materials
Cons. Staples
Energy
Industrials
MSCI ACWI Ex US
Financials
Cons. Disc.
Health Care
Utilities
Info. Tech.
Return (%)
International Economic Sector Performance
Source: Morningstar Direct; Baird Analysis. Sectors based on global industry classification standards (GICS). The MSCI ACWI Ex US Index is a benchmark designed to measure developed market and emerging market performance excluding the U.S. See important disclosures in appendix.
As of March 31, 2018
MSCWI ACWI Ex U.S. Performance by Sector (Latest Quarter)
Sector Weighting (%) of the MSCI ACWI Ex U.S. Index
MSCWI ACWI Ex U.S. Performance by Sector (Year to Date)
Robert W. Baird & Co. Member SIPC. 32
-15
-10
-5
0
5
10
15
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
12-M
o P
erf
orm
an
ce
Dif
fere
nti
al
(%)
-50
-40
-30
-20
-10
0
10
20
30
40
50
Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
12-M
o P
erf
orm
an
ce
Dif
fere
nti
al
(%)
-30
-20
-10
0
10
20
30
Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18
12-M
o P
erf
orm
an
ce
Dif
fere
nti
al
(%)
Investment Style Leadership
Source: Morningstar Direct. Returns based on 12-month performance, calculated monthly over the most recent 10-year period. Benchmark proxies are as follows: S&P 500 (U.S.), MSCI EAFE (Int’l), MSCI EAFE Value (Value) and MSCI EAFE Growth (Growth), MSCI EAFE (Developed markets), and MSCI EM (Emerging markets). See important disclosures and definitions included with this publication.
As of March 31, 2018
U.S. vs. International (Rolling 12-Month Periods)
U.S. Outperforms
Int’l Outperforms
Developed vs. Emerging Markets (Rolling 12-Month Periods) Value vs. Growth (Rolling 12-Month Periods)
Developed Outperforms
Emg. Markets Outperforms
Value Outperforms
Growth Outperforms
Robert W. Baird & Co. Member SIPC. 33
21.8
14.3
14.9
5
7
9
11
13
15
17
19
21
23
25
Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
P/E
Ratio
(TTM
)
S&P 500 MSCI EAFE MSCI EM
Global Stock Market Valuations
Source: Standards & Poor’s (S&P 500); MSCI benchmarks (country returns). All performance is measured in USD. US is measured by the S&P 500 Index, Developed International is measured by the MSCI EAFE Index, Emerging International is measured by the MSCI EM Index. P/E ratios are based on trailing 12 month earnings. See important disclosures and definitions included with this publication.
As of March 31, 2018
Historical P/E Ratio
Current P/E Ratio of Selected Countries
14.214.8
16.4
13.0 12.6
14.0
16.016.7
14.3
11.9
8.7
13.3
17.5
21.8
8.77.7
0
2
4
6
8
10
12
14
16
18
20
22
24
26
UK France Switzerland Germany Spain Japan Australia Hong Kong Singapore China S. Korea Brazil S. Africa India Mexico Russia
P/E
Ra
tio
(T
TM
)
Europe Asia-Pacific Emerging Markets
Robert W. Baird & Co. Member SIPC. 34
17.5
14.9 14.2
16.414.8
13.0
15.8
12.6
15.6
12.2
19.518.2
14.016.0 16.7
14.3
0
5
10
15
20
25
30
35
P/E
Ra
tio
Country Valuation Ranges
Source: Morningstar Direct. USA is represented by the S&P 500. All other countries are represented by the respective MSCI country benchmark. P/E ratios are based on trailing 12 month earnings. See important disclosures and definitions included with this publication.
As of March 31, 2018
Developed Markets: 7-Year P/E Valuation Ranges
Emerging Markets: 7-Year P/E Valuation Ranges
7-Year Low
7-Year High
Current
Average
LEGEND
11.9
8.7
13.8
21.8
7.7
16.8 16.9 16.2
13.3
8.7
19.7
12.1
17.5
0
5
10
15
20
25
30
P/E
Ra
tio
Robert W. Baird & Co. Member SIPC. 36
Bond Market Snapshot
Source: Morningstar Direct; Barclays benchmarks. Individual security types are subsets of either the Barclays U.S. Aggregate or Municipal Bond benchmarks. Duration, measured in years, is a relative term that expresses the price sensitivity of an investment/benchmark to changes in interest rates. All else equal, the lower the duration, the less price sensitivity to interest rate changes. See important disclosures and definitions included with this publication.
As of March 31, 2018
Bond Types Yield (%) Duration Last Qtr YTD 1-Year 3-Year 5-Year 10-Year 2017 2016 2015 Benchmark
Broad Developed Markets
U.S. Taxable Bonds 3.1 6.1 (1.5) (1.5) 1.2 1.2 1.8 3.6 3.5 2.6 0.5 BBgBarc US Aggregate Bond
U.S. Municipal Bonds 2.7 6.0 (1.1) (1.1) 2.7 2.3 2.7 4.4 5.4 0.2 3.3 BBgBarc Municipal Bond
International Bonds 0.8 8.0 3.6 3.6 11.7 4.6 1.2 1.8 10.5 1.5 (6.0) BBgBarc Glbl Agg. Bond ex US
Broad Emerging Markets
Emerging Market Bonds 5.0 5.8 (1.5) (1.5) 3.2 5.1 3.9 6.8 8.2 9.9 1.3 BBgBarc Emerging Markets
Taxable Bond Categories
Treasuries 2.6 6.1 (1.2) (1.2) 0.4 0.4 1.1 2.7 2.3 1.0 0.8 BBgBarc US Treasury
Agencies 2.6 6.0 (1.1) (1.1) 0.4 0.5 1.1 2.7 2.3 1.0 0.9 BBgBarc US Government
Mortgage-Backed 3.3 5.1 (1.2) (1.2) 0.8 1.1 1.8 3.5 2.5 1.7 1.5 BBgBarc US MBS
Inv-Grade Corporate 3.8 7.5 (2.3) (2.3) 2.7 2.3 3.0 5.4 6.4 6.1 (0.7) BBgBarc US Corporate IG
High Yield Corporate 6.2 4.1 (0.9) (0.9) 3.7 5.2 5.0 8.1 7.5 17.5 (4.6) BofA/ML High Yield Master II
Municipal Bond Categories
Insured 2.9 6.5 (1.2) (1.2) 2.6 2.2 3.1 4.6 5.4 0.7 2.9 BBgBarc Municipal Insured
State GO 2.5 5.3 (1.2) (1.2) 1.9 1.7 2.1 4.0 4.7 (0.4) 3.0 BBgBarc Municipal State GO
Local GO 2.6 6.6 (1.2) (1.2) 2.8 2.2 2.7 4.4 5.9 (0.1) 3.2 BBgBarc Municipal Local GO
Revenue 2.8 3.4 (1.2) (1.2) 3.1 2.5 3.0 4.7 6.0 0.4 3.6 BBgBarc Municipal Revenue
High Yield 5.3 8.1 0.6 0.6 6.0 4.6 4.1 5.6 9.7 3.0 1.8 BBgBarc High Yield Muni
Annual Returns (%)Trailing Returns (%)Characteristics
Robert W. Baird & Co. Member SIPC. 37
-0.2
-1.2
-3.6
-2.9
-1.9
-2.4
-2.1
-0.9
-0.2
-1.2
-3.6
-2.9
-1.9
-2.4
-2.1
-0.9
-4
-3
-2
-1
0
Short-Term Intermediate Long-Term AAA AA A Baa Below Baa(High Yield)
Re
turn
(%
)
QTR YTD
0.3
-1.2
-1.6
-1.2-1.1 -1.2
-1.0
0.6
0.3
-1.2
-1.6
-1.2-1.1 -1.2
-1.0
0.6
-2
-1
0
1
Short-Term Intermediate Long-Term AAA AA A Baa Below Baa(High Yield)
Re
turn
(%
)
QTR YTD
Performance by Maturity and Credit Quality
Source: Bloomberg; Baird Analysis. Ratings are as defined by Bloomberg and represent bonds in the Barclays Aggregate Bond index (taxable bonds) and Barclays Municipal Index (municipal bonds). Short-term maturity is defined as 1-3 years, intermediate is 5-7 years for taxable and 6-8 for municipal, long-term is 10+ years for taxable and 8-12 years for municipal. See important disclosures and definitions included with this publication.
As of March 31, 2018
Taxable Bonds
Municipal Bonds
Robert W. Baird & Co. Member SIPC. 38
Yield and Volatility Characteristics of Various Bond Types
Source: Morningstar Direct; Barclays benchmarks. Individual security types are subsets of either the Barclays U.S. Aggregate or Municipal Bond benchmarks. Bond types are represented by the following indices: Barclays Aggregate Bond (Broad Bond Market), Barclays US MBS (Mortgage-Backed), Merrill Lynch High Yield Master II (High Yield), Barclays IG Corporate (Corporate), Barclays Municipal (Municipal), Barclays US Treasury (U.S. Treasury), Barclays Global Aggregate ex USD (International), and S&P/LSTA Leveraged Loan (Bank Loans). Indices are unmanaged and are used to measure and report performance of various sectors of the market. Past performance is no guarantee of future results and diversification does not ensure against loss. Direct investment in indices is not available. See important disclosures and definitions included with this publication.
As of March 31, 2018
The Relationship Between Yield and Volatility
International
Bank Loans
Emerging Mkts
Broad Bond Market
High Yield
Treasury
Mortgage-Backed Corporate
Municipal
HY Municipal
0
2
4
6
8
0 2 4 6 8 10 12
Yie
ld (%
)
10-Year Historical Volatility (Standard Deviation)
Robert W. Baird & Co. Member SIPC. 39
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Yie
ld (
%)
Maturity
03/31/18 Current Qtr
03/31/17 Last Year
20yr
6m
o
2yr
3yr
5yr
30 y
r
U.S. Treasury Bonds
As of March 31, 2018
Source: U.S. Department of Treasury; Baird Analysis. See important disclosures and definitions included with this publication.
U.S. Treasury Yield Curve Historical U.S. Treasury Rates
Current U.S. Treasury Yields by Maturity
1.731.93
2.272.39
2.562.74
2.97
0
1
2
3
4
3 mo 6 mo 2 yr 3 yr 5 yr 10 yr 30 yr
Yie
ld (
%)
1
2
3
4
5
6
7
8
9
10
10
-Year U
.S. Treasu
ry R
ate
(%
)
Robert W. Baird & Co. Member SIPC. 40
1.71.9
2.12.3 2.4
2.6 2.7 2.7 2.9 3.0
1.4 1.5 1.61.7
1.82.1
2.32.5
2.9 3.0
2.3 2.32.5
2.72.9
3.33.6
3.9
4.64.8
0
1
2
3
4
5
6
3mo 6mo 1yr 2yr 3yr 5yr 7yr 10yr 20yr 30yr
Yie
ld (
%)
Treasury
Municipal
Tax-Equivalent Yield
U.S. Treasury Bonds
As of March 31, 2018
Source: U.S. Department of Treasury; Bloomberg. Municipal yields are based on the Barclays AAA GO Bond Index. The Tax-Equivalent Yields assumes a 39.6% federal tax rate and full exemption of those taxes. See important disclosures and definitions included with this publication.
U.S. Municipal and Treasury Yield Curve
Yield Comparisons of Treasury and Municipal Bonds
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Yie
ld (
%)
Maturity
Treasury Municipal
20yr
3m
o6m
o
10yr
30yr5
yr
Robert W. Baird & Co. Member SIPC. 41
0
3
6
9
12
15
18
21
24
27
Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18
Eff
ec
tiv
e Y
ield
(%
)
5.1
6.5
10.5
0.73.8
26.8
0
10
20
30
40
50
60
70
80
90
100
0
2
4
6
8
10
12
14
16
18
20
BB B CCC
Av
era
ge
De
fau
lt R
ate
(%
)
Eff
ec
tiv
e Y
ield
(%
)
3.4 3.33.6
4.1
0.0 0.0 0.1 0.2
0
10
20
30
40
50
60
70
80
90
100
0
1
2
3
4
5
6
7
8
9
10
AAA AA A BBB
Av
era
ge
De
fau
lt R
ate
(%
)
Eff
ec
tiv
e Y
ield
(%
)
Corporate Bond Yields
As of March 31, 2018
Source: BofA/Merrill Lynch, Standard & Poor’s. Investment Grade Bonds are represented by the BofA/ML US Corporate Bond Index; High Yield Bonds are represented by the BofA/ML High Yield Master II Index. Historic default rates provided by Standard & Poor’s and encompass the period from 1/1/81 to 12/31/16. See important disclosures and definitions included with this publication.
Investment Grade Bonds: Historical Yields Investment Grade Bonds: Current Yield and Historic Default Rate
High Yield Bonds: Historical Yields High Yield Bonds: Current Yield & Historic Default Rate
0
2
4
6
8
10
12
Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18
Eff
ec
tiv
e Y
ield
(%
)
Robert W. Baird & Co. Member SIPC. 42
Bond Spreads
As of March 31, 2018
Source: Barclays, Bloomberg. The length of each bar represents the range of a particular spread relative to an appropriate Treasury benchmark over the past 10 years. The maximum and minimum spreads are capped at the 95th and 5th percentiles to account for outliers. The data point marked ‘current’ represents the most recent quarter. Past performance is not a guarantee of future results and this chart is not intended to be a valuation tool.
Average Option-Adjusted Spread: Max/Min/Avg
1772
575
169 145 145
336
97
4 34
10 (100)
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
High Yield Corporate MBS Global Agencies
Sp
read
over
Tre
asu
ry B
on
d (b
ps)
Current Average
High Yield Corporate MBS Global Agencies
High 1772 575 169 145 145
Average 607 186 48 63 29
Low 336 97 4 34 10
Current 343 93 25 38 14
Current/Historical Spreads (%)
Robert W. Baird & Co. Member SIPC. 43
Bond Sector Yields and Returns
As of March 31, 2018
Source: Barclays, Baird Analysis. Sector yields reflect yield to worst. Change in bond price is calculated using both duration and convexity according to the following formula: New Price = (Price + (Price * -Duration * Change in Interest Rates)) + (0.5 * Price * Convexity * (Change in Interest Rates)^2). Chart is for illustrative purposes only. Past performance is not indicative of future results.
Price Impact of a 1% Rise/Fall in Interest Rates
Bond Sector Avg. Maturity Avg. Yield Credit Quality YTD 1-Year Benchmark
Short-Term 2.8 2.4 AA+ -0.40% -0.40% BBgBarc US Treasury 1-5 Yr
Intermediate-Term 7.0 2.7 AA+ -1.51% -0.25% BBgBarc US Treasury 5-10 Yr
Long-Term 14.5 2.8 AA+ -2.47% 0.37% BBgBarc US Treasury 10-20 Yr
TIPS 8.2 2.8 AA+ -0.79% 0.92% BBgBarc US Treasury US TIPS
Aggregate Bond 8.4 3.1 AA -1.46% 1.20% BBgBarc U.S. Aggregate Bond
IG Corporates 11.1 3.8 AA+ -2.32% 2.70% BBgBarc U.S. Corporate IG
HY Corporates 6.2 6.5 B -0.86% 3.78% BBgBarc U.S. High Yield - 2% Issuer Cap
Floating Rates 2.6 2.3 A+ 0.44% 2.09% BBgBarc U.S. Floating Rate Notes
MBS 7.4 3.3 AAA -1.19% 0.77% BBgBarc U.S. Mortgage Backed Securities
ABS 2.2 2.8 AA+ -0.39% 0.62% BBgBarc Asset-Backed Securities
U.S. Treasuries
Returns
Broad Market
Sector Statistics
-2.7%
-6.2%-7.2%
-10.0%
-0.1%
-2.1%
-4.4%
-6.4%-5.6% -6.2%
-7.0%
2.8%
6.7%8.1%
11.5%
0.1%
2.1%
4.1%5.3% 4.7%
6.5%8.1%
-15%
-10%
-5%
0%
5%
10%
15%
1-5 Yr
Treasury
5-10 Yr
Treasury
TIPS 10-20 Yr.
Treasury
Floating Rate ABS HY Corporates MBS Municipals Total Bond
Market
IG Corporates
+1% -1%
Robert W. Baird & Co. Member SIPC. 44
Mutual Fund Over/Under Performance (Bond Funds)
Mutual Fund Style Universe: Style-specific universe of mutual funds as categorized by Morningstar. Number of funds in each category as of March 2017: 103 for Short-Term Taxable, 227 Intermediate Term Taxable, 50 for Short-Term Municipal, and 77 for Intermediate Municipal. Source: Morningstar Direct; Barclays benchmarks; Baird Analysis. See important disclosures and definitions included with this publication.
Mutual Fund
Performance
Active investment managers
often have a primary
objective of outperforming a
relevant market benchmark
based on the fund’s
investment style. In certain
periods, active managers
can find it easier or more
difficult to outperform.
This chart examines four
main assets classes,
detailing what percentage of
mutual fund managers over-
or under-performed in a
given period. This provides
useful context when
assessing mutual funds that
you may own.
Percent of Funds Outperforming Market Benchmarks (Trailing 1 Year)
As of March 31, 2018
Percent of Funds Outperforming Market Benchmarks (Trailing 5 Years)
82%91%
78% 82%
0%
25%
50%
75%
100%
Short Term Taxable Intermediate Taxable Short Term Municipal Intermediate Municipal
Pe
rce
nt o
f T
ota
l
% Underperform
% Outperform
78%87%
23%
52%
0%
25%
50%
75%
100%
Short Term Taxable Intermediate Taxable Short Term Municipal Intermediate Municipal
Pe
rce
nt o
f T
ota
l
% Underperform
% Outperform
Disclosures
Disclaimers
This is not a complete analysis of every material fact regarding any company, industry or security. The
information has been obtained from sources we consider to be reliable, but we cannot guarantee the
accuracy. Past performance is not a guarantee of future results.
Style Definitions
Large Growth: equity securities of large capitalization companies having growth stock characteristics (high
price to earnings, high return on equity and low dividend yield. Based upon the Russell 1000® Growth Index.
Large Value: equity securities of large capitalization companies having value stock characteristics (low
forecasted price-to-earnings ratio, low price-to-book ratio, high dividend yield). Based upon the Russell 1000®
Value Index. Mid Growth: equity securities of middle capitalization companies having growth stock
characteristics (high price to earnings, high return on equity and low dividend yield). Based upon the Russell
Midcap® Growth Index. Mid Value: equity securities of middle capitalization companies having growth stock
characteristics (high price to earnings, high return on equity and low dividend yield). Based upon the Russell
Midcap® Value Index. Small Growth: equity securities of small capitalization companies having growth stock
characteristics (high price to earnings, high return on equity and low dividend yield). Small capitalization stock
may be subject to additional risks including illiquidity. Based upon the Russell 2000® Growth Index. Small
Value: equity securities of small capitalization companies having value stock characteristics (low price-to-
earnings ratio, low price-to-book ratio, high dividend yield). Small capitalization stocks may be subject to
additional risks including illiquidity. Based upon the Russell 2000® Value Index. International: a free float-
adjusted market capitalization index that is designed to measure developed market equity performance,
excluding the US & Canada, consisting of 21 developed market country indices. Based upon the MSCI EAFE
Index. Satellite: these asset classes, as defined by Baird, include commodities, real estate, high yield bonds
and emerging markets. Representative benchmarks are as follows: Dow Jones UBS Commodity
(commodities), Dow Jones US REIT (real estate), BofA High Yield Master II (high yield), and MSCI Emerging
Markets (emerging markets). Short Term Taxable: Short-term bond portfolios invest primarily in corporate
and other investment-grade U.S. fixed-income issues and have durations of one to 3.5 years. Based upon the
Barclays 1-3 Year Govt/Credit Index. Intermediate Taxable: Intermediate-term bond portfolios invest
primarily in corporate and other investment-grade U.S. fixed-income issues and have durations of 3.5 to six
years. Based upon the Barclays Intermediate Gov’t/Credit Index. Short Term Municipal: Muni national short
portfolios invest in bonds issued by various state and local governments to fund public projects. These
portfolios have durations of less than 4.5 years. Based upon the Barclays 3 Year Municipal Index.
Intermediate Term Municipal: Muni national short portfolios invest in bonds issued by various state and
local governments to fund public projects. These portfolios have durations of 4.5 to 7 years. Based upon the
Barclays 7 Year Municipal Index.
GICS
The Global Industry Classification Standard ("GICS") is the exclusive property of Morgan Stanley Capital
International Inc. ("MSCI") and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") and
is licensed for use by Robert W. Baird & Co. Inc. MSCI and S&P hereby provided all information "as is" and
expressly disclaim all warranties. Without limiting any of the foregoing, in no event shall MSCI or S&P have
any liability.
Domestic Equity Benchmarks
S&P 500® Index: A representative sample of 500 leading companies in leading industries of the U.S.
economy. Considered a large-cap index.
Russell 3000® Growth Index: Measures the performance of those Russell 3000® Index companies with
higher price-to-book ratios and higher forecasted growth values. An all-cap index.
Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. This
and other information is found in the prospectus or summary prospectus. For a prospectus or summary prospectus, contact
your Baird Financial Advisor. Please read the prospectus carefully before investing.
Russell 3000® Value Index: Measures the performance of those Russell 3000® Index companies with lower
price to- book ratios and lower forecasted growth values. An all-cap index.
Russell Top 50® Index: Measures the performance of the 50 largest companies in the Russell 1000® Index,
which represents approximately 40% of the total market capitalization of the Russell 1000® Index. A mega-cap
index.
Russell Top 200® Index: Measures the performance of the 200 largest companies in the Russell 1000®
Index, which represents approximately 68% of the total market capitalization of the Russell 1000® Index. A
large-cap index.
Russell 1000® Growth Index: Measures the performance of those Russell 1000® Index companies with
higher price-to-book ratios and higher forecasted growth values. A large-cap index.
Russell 1000® Value Index: Measures the performance of those Russell 1000® Index companies with lower
price to- book ratios and lower forecasted growth values. A large-cap index.
Russell 1000® Defensive/Dynamic Index: Measures the performance of those Russell 1000® Index
companies based in terms of volatility of price and earnings, leverage and return on assets. The Russell 1000®
Defensive Index includes those with relative stability and less sensitivity to economic cycles. The Russell
1000® Dynamics Index includes those with less stability and greater sensitivity to economic cycles.
Russell Midcap® Index: Measures the performance of the 800 smallest companies of the Russell 1000®
Index, which represents approximately 36% of the total capitalization of the Russell 1000® Index. A mid-cap
index.
Russell Midcap® Growth Index: Measures the performance of those Russell Midcap® Index companies with
higher price-to-book and higher forecasted growth values. A midcap index.
Russell Midcap® Value Index: Measures the performance of those Russell Midcap companies with lower
price-to book and lower forecasted growth values. A mid-cap index.
Russell 2000® Index: Measures the performance of the 2,000 smallest companies in the Russell 3000®
Index, which represent approximately 10% of the total market capitalization of the Russell 3000® Index. A
small-cap index.
Russell 2000® Growth Index: Measures the performance of those Russell 2000® Index companies with
higher price-to-book ratios and higher forecasted growth values. A small-cap index.
Russell 2000® Value Index: Measures the performance of those Russell 2000® Index companies with lower
price-to- book ratios and lower forecasted growth values. A small-cap index.
Russell Microcap Index: Measures the performance of smallest 1000 companies in the Russell 2000® Index,
which represents less than 3% of the total market capitalization. A micro-cap index.
Dow Jones U.S. Real Estate: Measures the performance of Real Estate Investment Trusts (REIT) and other
companies that invest directly or indirectly through development, management or ownership, including
properties.
Dow Jones Industrial Average: A price-weighted index composed of 30 actively-traded large cap stocks.
Bloomberg Commodity: Aims to provide broadly diversified representation of commodity markets and
represents 20 commodities, weighted based on economic significance and market liquidity.
S&P 500® High/Low Quality Index: The S&P Quality Rankings System measures growth and stability of
earnings and dividends within the S&P 500 Index. The S&P 500 High Quality Index tracks stocks identified by
Standard & Poor’s as high quality (ranked A and above); The S&P 500 Low Quality Index tracks stocks
identified by Standard & Poor’s as low quality (ranked B and below).
The Russell Indices are a trademark of the Frank Russell Company. Russell® is a trademark of the Frank
Russell Company.
Disclosures
Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. This
and other information is found in the prospectus or summary prospectus. For a prospectus or summary prospectus, contact
your Baird Financial Advisor. Please read the prospectus carefully before investing.
MSCI International Equity Benchmarks
MSCI EAFE Index: A free float-adjusted market capitalization index that is designed to measure developed
market equity performance, excluding the US & Canada. The MSCI EAFE Index consists of 21 developed
market country indices in Europe, Australasia, and the Far East. An international index.
MSCI EAFE Large Cap: The MSCI EAFE Large Cap Index is an unmanaged, market-weighted index of large
companies in developed markets, excluding the U.S and Canada. An international large cap index.
MSCI EAFE Mid Cap: The MSCI EAFE Mid Cap Index is a free float-adjusted market capitalization index
that is designed to measure the performance of mid capitalization equities in the developed markets excluding
the US & Canada. An international mid cap index.
MSCI EAFE Small Cap: The MSCI EAFE Small Cap Index represents the small cap segment in 21
developed equity markets outside of North America. It targets 40% of the eligible small cap universe in each
country. An international small cap index.
MSCI EAFE Growth: A sub-set of the MSCI EAFE Index, this benchmark is generally considered to be
representative of the international growth stock market activity and often used as a benchmark for
international growth equity portfolios. An international growth index.
MSCI EAFE Value: A sub-set of the MSCI EAFE Index, this benchmark is generally considered to be
representative of international value stock market activity and often used as a benchmark for international
value equity portfolios. An international value index.
MSCI Europe Index: A free float-adjusted market capitalization index that is designed to measure developed
market equity performance in Europe. As of June 2006, the MSCI Europe Index consisted of the following 16
developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,
Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK. An international index.
MSCI Pacific ex Japan Index: A free float-adjusted market capitalization index designed to measure equity
market performance in the Pacific region, minus Japan. As of June 2006, the MSCI Pacific ex Japan Index
consisted of the following 5 Developed Market countries: Australia, Hong Kong, New Zealand, and Singapore.
An international index.
MSCI BRIC: A free float-adjusted market capitalization weighted index that is designed to measure the equity
market performance of the following four emerging market country indices: Brazil, Russia, India and China.
MSCI Emerging Markets Index: A free float-adjusted market capitalization index that is designed to measure
equity market performance in the global emerging markets. As of December 2003 the MSCI Emerging
Markets Index consisted of 26 emerging market country indices. An emerging markets index.
MSCI Country Indices: To construct an MSCI Country Index, every listed security in the market is identified.
Securities are free float adjusted, classified in accordance with the Global Industry Classification Standard
(GICS®), and screened by size and liquidity. MSCI then constructs its indices by targeting for index inclusion
85% of the free float adjusted market capitalization in each industry group, within each country. By targeting
85% of each industry group, the MSCI Country Index captures 85% of the total country market capitalization
while it accurately reflects the economic diversity of the market. International indices.
Fixed Income Benchmarks
Barclays Aggregate Bond Index: is an unmanaged index that tracks domestic investment-grade bonds,
including corporate, government, and mortgage-backed securities.
Barclays 1-3 Yr Government/Credit Bond Index: Includes bonds covered by the Barclays
Government/Credit Index, with maturities from 1 up to (but not including) 3 years.
Barclays Intermediate Government/Credit Bond Index: Composed of approximately 3,500 publicly issued
corporate and U.S. government debt issues rated Baa or better, with at least one year to maturity and at least
$1 million par outstanding. The index is weighted by the market value of the issues included in the index. The
Index has duration of a little over 3 years and a maturity equal to slightly more than 4 years.
Barclays Muni Bond Index: Bonds must have a minimum credit rating of at least Baa, an outstanding par
value of at least $3 million, part of a transaction of at least $50 million, issued after December 31, 1990 and
have a year or longer remaining maturity.
Barclays 3 Year Muni Bond Index: Includes bonds that have a minimum credit rating of BAA3, are issued
as part of a deal of at least $50 million, have a minimum maturity of 2 years and a maximum maturity of 4
years, and have been issued after December 31, 1990.
Barclays 7 Year Muni Bond Index: This index is a subset of the BC Municipal Bond Index. It includes
maturities of six to eight years.
Barclays Global Aggregate ex USD Index: Tracks investment-grade government, corporate, agency, and
mortgage-related bonds in markets outside the U.S. An international bond index.
BofA/ML US High Yield Master II Index: The US High Yield Master II Index tracks the performance of below
investment grade US dollar-denominated corporate bonds publicly issued in the US domestic market, subject
to various qualifications. A high yield taxable bond index.
Barclays US Treasury Bond Index: Measures the performance of public obligations of the US Treasury with
a remaining maturity of one year or more.
Barclays US MBS Index: Measures the performance of investment grade mortgage-backed pass-through
securities of GNMA, FNMA and FHLMC.
Barclays IG Corporate: Measures the performance of investment grade corporate bonds with a remaining
maturity of one year or more.
Citigroup Treasury Bill 3 Month: An unmanaged index of three-month Treasury bills. Representative of
short-term money market deposits, or “cash”.
S&P/LTSA Leveraged Loan: A broad index designed to reflect the performance of U.S. dollar facilities in the
leverage loan market.
Other Benchmarks
Dow Jones CSFB Managed Futures: Designed to provide transparent representation of managed futures
hedge fund performance. Funds are selected by Credit Suisse based on eligibility standards, rebalanced
semi-annually and performance is calculated quarterly.
Dow Jones CSFB Multi-Strategy: Designed to provide transparent representation of fund of hedge fund
performance. Funds are selected by Credit Suisse based on eligibility standards, rebalanced semi-annually
and performance is calculated quarterly.
Dow Jones CSFB Long/Short: Designed to provide transparent representation of long/short equity hedge
fund performance. Funds are selected by Credit Suisse based on eligibility standards, rebalanced semi-
annually and performance is calculated quarterly.
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