Upbeat intro music plays in the background.
The Charles Schwab logo appears on a white background. A multi-colored line animates out to the right and forms a circle. Text appears inside the circle: Schwab Intelligent Portfolios®.
The line forming the circle then unravels and animates to the right again. The camera pans right with it, and more text appears: Q1 2024 Market Commentary.
The visual fades to reveal the speaker, Jack McManmon, standing in front of a bright and blurred background.
On-screen text: Jack McManmon, Senior Investment Strategist, Schwab Intelligent Portfolios.
Hello, I’m Jack McManmon, Senior Investment Strategist for the Schwab Intelligent Portfolios, with your quarterly update.
Stock markets around the globe marched higher in the first quarter, with U.S. large-cap equities leading the way, delivering their best first quarter since 2019. Investor sentiment was buoyed by strong earnings and a U.S. Federal Reserve upgrade to its economic outlook while standing by their expectation of three interest rate cuts this year.
Three illustrated icons appear in the space to the right of the host: a chart trending upward, a bull, and a federal building. They briefly animate as corresponding topics are mentioned: the chart for “markets marched higher,” the bull for “investor sentiment was buoyed,” and the federal building for “U.S. Federal Reserve.”
An animated transition reveals a square that reads “How markets performed in Q1 2024.” That screen fades to reveal a chart labeled “Q1 saw positive returns across asset categories.”
A blue line animates on the chart, representing the U.S. Large Cap Stocks (S&P 500 Index) performance, and starts at 25% in January 2022. It ends at about 40% in April 2024 and turns gray.
U.S. large caps followed up their remarkable surge in the prior quarter with another impressive showing, providing further evidence...
A second line appears on the chart, in purple, representing the U.S. Small Cap Stocks (Russell 2000 Index) performance, and starts at 10% in January 2022. It ends at about 7% in April 2024 and turns gray.
...that the U.S. market rally has broadened beyond just a handful of mega-cap growth stocks.
A third blue line appears on the chart representing International Stocks (MSCI EAFE Index) performance, starting at 6% in January 2022. It ends at about 9% in April 2024.
International large company stocks also gained, led by Japanese stocks, which have benefited from economic growth...
The video transitions back to the host.
...that was strong enough to prompt the Bank of Japan to increase interest rates for the first time since 2007. International small company and emerging markets stocks also rose modestly in the quarter.
The screen transitions to another chart showing interest rate percentages labeled “Higher interest rates caused modest dips for U.S.” A line animates on starting at a 1.5% interest rate in January 2022, and ends in April 2024 at 4.3%.
U.S. and International REITs fell, partly due to higher interest rates, but were also impacted by the Fed’s suggestion that they wouldn’t begin cutting rates until later in 2024.
The screen transitions to another chart showing bond performance labeled “Most bond categories saw declines in the quarter.” Three bars animate on to show Q1 return percentage for investment-grade corporate bonds (-0.41%), U.S. treasuries (-0.64%), and high-yield bonds (1.27%).
Rising rates across the yield curve in the first quarter also pressured bonds, with most categories seeing declines. High-yield bonds bucked the trend, as strong company earnings may result in lower default rates than the market expected.
The screen cuts back to Jack.
Cash yields were also strong and remain a key feature of the Schwab Intelligent Portfolios.
Cut to another chart labeled “The price of gold has risen nearly 40% since October 2022, showing the price of gold per ounce over time. A line animates on starting at $1,800 in January 2022 and ends near $2,330 in April 2024.
Since October of 2022, the price of gold has risen nearly 40%, initially driven by a falling U.S. dollar, but more recently, geopolitical tensions and the prospect of lower yields on bonds and cash in the future seem to be fueling the rally. In the first quarter, gold’s 7.3% return trailed only U.S. large-cap and U.S. large-cap fundamental stocks.
The screen cuts back to Jack.
While some do attribute the rise in gold to the unrest in the Middle East and Ukraine, others suggest that investors are anticipating the Fed engineering a “soft landing” and are on a spending spree that’s simultaneously pushing stocks, cryptocurrency, and gold to new or recent highs.
An animated transition reveals a square that reads “How Schwab Intelligent Portfolios performed in Q1 2024.”
The screen cuts back to Jack.
Returns in the Schwab Intelligent Portfolios in the first quarter of 2024 were nearly all positive, with the exception being some very conservative models that predominately hold fixed income, which had negative returns.
Cut to a graph labeled “Conservative Portfolios” with four categories: Stocks, Cash, Fixed Income, and Commodities. The caption reads “Slightly negative returns this quarter.” The allocations in the circle shift to depict “Growth Portfolios,” with the caption changing to “Saw strong Q1 gains.”
Growth models that feature higher allocation to equities performed best...
The allocations in the circle shift again to depict “Moderate Portfolios” with the caption “Saw modest returns.”
...while more bond-oriented and income models saw more moderate returns.
The screen cuts back to Jack.
With the second quarter underway, the list of items that we’re watching closely remains the same as it was the beginning of the year: Fed policy, geopolitics, and election year politics.
Not only will the U.S. have a presidential election this year, but roughly half the globe, or over 60 countries, will hold elections.
An animated transition reveals a box that reads “How Schwab Intelligent Portfolios can help you.” It cuts back to Jack with a box for text on the right that reads: “Schwab Intelligent Portfolios can help you:”
As they’re mentioned, the following points animate in:
● Navigate uncertain times.
● Achieve your investment objectives.
● Diversify your portfolio.
● Keep costs low.
● Rebalance periodically.
● Stick with your long-term plan.
Schwab Intelligent Portfolios are designed to help our clients navigate uncertain times in order to achieve their investment objectives. We believe that broad diversification, low cost, and periodic rebalancing are key features of a successful long-term investment plan.
Thank you for watching. We have many online resources available designed to help you achieve your investment goals, and we’re always available by phone to answer any questions you may have.
The screen fades to a solid dark blue background with the text: “Additional Resources. We are here 24/7. Contact a service professional at (855) 694-5208. Learn more. Investing Insights blog at schwab.com/learn/intelligent-portfolios-insights. Volatility strategies at schwab.com/downturn.
The screen transitions back to Jack one final time.
Thanks again, and we look forward to continuing to serve you in the coming quarters and years ahead.
Upbeat music plays in the background.
The screen fades to the Charles Schwab logo. The logo then shrinks and moves to the top center of the frame. The following disclosures appear below the logos:
Investment Products: Not FDIC-Insured • No Bank Guarantee • May Lose Value
This quarterly commentary is designed to provide you with insight into the market environment during the quarter. How your portfolio performed is dependent upon your asset allocation across the risk spectrum from conservative to aggressive, as well as criteria such as when you opened your account, the timing of any deposits/withdrawals, timing of portfolio rebalances, whether you are enrolled in tax-loss harvesting and other criteria.
Please read the Schwab Intelligent Portfolios Solutions disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs.
Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium® are made available through Charles Schwab & Co. Inc. ("Schwab"), a dually registered investment advisor and broker-dealer. Portfolio management services are provided by Charles Schwab Investment Management, Inc. ("CSIM"). Schwab and CSIM are subsidiaries of The Charles Schwab Corporation.
Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium are designed to monitor portfolios on a daily basis and will also automatically rebalance as needed to keep the portfolio consistent with the client's selected risk profile. Trading may not take place daily.
Diversification, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses.
Tax‐loss harvesting is available for clients with invested assets of $50,000 or more in their account. Clients must choose to activate this feature.
Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. For more information on indexes please see www.schwab.com/indexdefinitions.
Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.
Investing involves risk including loss of principal.
© 2024 Charles Schwab & Co., Inc., Member SIPC. All rights reserved. 0424-YGUU
