Client Letter – Q1 2024

During the first quarter of 2024, the best performing asset classes were U.S. and international large stocks.  The following chart shows the 3-month, 1-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, 2024

DFA Fund / Index 3 Month Return 1 Year Return* 20 Year Return*
S&P 500 Index 10.56 29.88 10.15%
DFA World Core Equity 7.92 22.40 N/A
DFA U.S. Large Value 11.19 23.37 8.97%
DFA U.S. Small 5.06 19.82 9.06%
DFA U.S. Small Value 4.98 24.90 8.88%
DFA Real Estate (REITs) -1.28 7.83 7.45%
DFA Int’l Large 5.73 15.46 5.85%
DFA Int’l Large Value 6.95 18.71 6.07%
DFA International Small 3.21 11.03 7.10%
DFA Int’l Small Value 5.32 16.24 7.30%
DFA Emerging Markets Core 2.64 10.25 7.20%
DFA 5-Year Global Bonds 1.41 4.98 2.33%
DFA Inflation Protected Bonds 0.00 0.14 N/A

*Note: Returns for periods greater than 1 year are annualized.  Top 3 returns are in bold. 

The stock market reached new all-time highs in the first quarter of 2024 as investors are increasingly convinced that the US economy will avert recession. Beyond that, the Federal Reserve continues to indicate they intend to cut interest rates several times this year despite inflation stubbornly sticking around in the low 3% range. These factors resulted in the global stock market* increasing by 7.81% and the US bond market** declining -0.79% for the quarter.

It has been difficult for many investors to understand how the stock market can continue to rise despite all the negative headlines of geopolitical conflict, inflation, potential recession, tech layoffs and supply chain issues. The underlying, less frequently discussed story is one of corporate earnings beating low expectations, which we spoke about at length last year, along with continued efficiency gains and better than expected sales.

It can be easy to forget the slow and boring improvements that companies aim to achieve every quarter. The potential for artificial intelligence (AI) to increase the efficiency of these companies is part of the reason the stock market has risen so much in the last six months. Everyday the CEOs of all the companies you own are trying to find ways to perform better. This fact should not be discounted when investing for the long term.

Next, it’s that time of the year again where we all try to wrap up our tax returns before the April 15th 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 to help guide you forward. Feel free to reach out if you need anything.


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*As measured by Vanguard Total Stock Market (VTWIX)

**As measured by Vanguard Total Bond Market (VBTLX)

About Christopher Jones

Christopher Jones is the Founder and President of Sparrow Wealth Management, a fee-only financial planning and investment management firm. Before entering the investment field, Chris was a management consultant for Deloitte Monitor. He graduated summa cum laude from Brigham Young University with a B.S. in Economics and a minor in Business Management.