During the first quarter of 2022, the best performing asset classes were international large stocks, U.S. large value stocks, and U.S. small value stocks. The following chart shows the 3-month, 10-year, and 20-year performance of many DFA funds (representing different asset classes) compared to the S&P 500 Index:
Market Returns for the period ending March 31, 2022
DFA Fund / Index
3 Month Return
10 Year Return*
20 Year Return*
S&P 500 Index
DFA World Core Equity
DFA U.S. Large Value
DFA U.S. Small
DFA U.S. Small Value
DFA Real Estate (REITs)
DFA Int’l Large
DFA Int’l Large Value
DFA International Small
DFA Int’l Small Value
DFA Emerging Markets Core
DFA 5-Year Global Bonds
DFA Inflation Protected Bonds
*Note: Returns for periods greater than 1 year are annualized. Top 3 returns are in bold.
The new year had a troubling start on virtually all fronts, whether it be Covid cases that skyrocketed in mid-January, the investment markets roiled by rising interest rates, or a geopolitical crisis as Russia invaded Ukraine. The US bond market* finished down approximately 6% for the quarter and the global stock market** dropped approximately 5.6%. Fortunately, international large stocks were slightly up, and US small cap value and large cap value stocks had smaller losses, which helped lessen the decline for our portfolios.
The war in Ukraine is extremely troubling and has truly become a humanitarian crisis. We don’t know how this will play out and, unfortunately, no one else does either. Past geopolitical events have generally only had short-term impacts on the investment markets, but each event is unique. One thing we know for sure: trying to get in and out of the markets to avoid stock market declines is risky business. Case in point, the day Russia invaded Ukraine (February 24th) the S&P 500 was up 1.5%. We are quite certain no one saw that result coming. As of this writing, the global stock market** is actually up several percent from the day the war started.
Switching gears, the Federal Reserve increased interest rates at the March meeting for the first time since the fourth quarter of 2018. The bond market was expecting this as interest rates in the markets had been increasing since the start of 2022. This time last year the Federal Reserve was adamant they were not going to raise interest rates until 2023 at the earliest, but stubbornly-high inflation and excellent employment numbers caused them to reverse course quickly.
Generally, rising interest rates causes current bond values to decline, but fortunately, most of our bond holdings are short term, meaning they are not impacted as much and should start to reflect higher interest payments later this year. Higher interest payments are good news in the medium to long term for savers!
It is that time of the year again where we all try to wrap up our tax returns before the April 18th deadline. Please provide us with a copy of your entire federal and state tax return upon completion or remind your tax person to do so.
Now, in order to comply with the provisions of the Gramm-Leach-Bliley Act, SWM’s Privacy Statement is available here for your review. The Privacy Act requires that we deliver this to every client on an annual basis. Also, our ADV Part 2A & 2B has been updated recently. You can read the updated version by clicking on this link: ADV Part 2A & 2B.
We greatly appreciate the trust you have placed in us. Feel free to reach out if you need anything.
Enjoy the lovely spring weather!
*As measured by Vanguard Total Bond Market – VBLTX
**As measured by Vanguard Total Stock Market – VTWIX