During the past quarter, the best performing asset classes were emerging markets stocks, U.S. small value stocks, and the S&P 500 Index. The following chart shows the 3-month, 1-year, and 3-year performance of many DFA funds (representing different asset classes) compared to the S&P 500 Index:
Market Returns for the period ending June 30, 2026
| DFA Fund / Index | 3 Month Return | 1 Year Return* | 3 Year Return* |
| S&P 500 Index | 15.20 | 22.32 | 20.61 |
| DFA World Core Equity | 12.52 | 24.92 | 19.40 |
| DFA U.S. Large Value | 11.87 | 29.55 | 17.99 |
| DFA U.S. Small | 16.70 | 31.10 | 16.42 |
| DFA U.S. Small Value | 11.04 | 33.18 | 17.06 |
| DFA Real Estate (REITs) | 11.16 | 14.60 | 9.96 |
| DFA Int’l Large | 7.40 | 22.79 | 17.83 |
| DFA Int’l Large Value | 4.37 | 30.34 | 22.31 |
| DFA International Small | 5.47 | 18.00 | 17.29 |
| DFA Int’l Small Value | 4.25 | 27.64 | 24.47 |
| DFA Emerging Markets Core | 22.93 | 47.59 | 24.14 |
| DFA 5-Year Global Bonds | 1.55 | 3.96 | 4.79 |
| DFA Inflation Protected Bonds | 0.84 | 3.18 | 4.03 |
*Note: Returns for periods greater than 1 year are annualized. Top 3 returns are in bold.
The second quarter saw a strong rebound in financial markets as geopolitical tensions that weighed on investors earlier in the year began to ease and corporate earnings continued to exceed expectations. The S&P 500* returned 15.20% during the quarter, international stocks** gained 11.99%, and bonds*** rose 1.55%.
In last quarter’s letter, we cautioned against making investment decisions based on negative headlines. Citing research from Vanguard, we noted that although geopolitical related market declines can be unsettling, history has consistently shown that markets have a high probability of recovering over time. The events surrounding the Iran conflict provided another timely example.
S&P 500 (excluding dividends):
- February 28, 2026 (conflict begins): 6,878
- March 31, 2026: 6,528 (-5.08%)
- June 30, 2026: 7,499 (+14.87% from March 31 and +9.02% from February 28)
Just four months after the conflict began, the S&P 500 had not only recovered its losses but reached a level more than 9% above where it stood when the conflict started.
Many investors understandably ask how stocks can continue to move higher despite ongoing geopolitical uncertainty and unsettling headlines. The answer is often simpler than it seems: future earnings expectations.
According to JPMorgan, Wall Street’s consensus estimate for 2026 earnings per share (EPS) growth has increased from 13% at the beginning of the year to 22% today. In addition, approximately 85% of companies exceeded analysts’ first-quarter earnings estimates—well above the long-term average of 73%.
While headlines often dominate the news cycle, they are not the primary driver of long-term market performance. Over time, stock prices tend to reflect one fundamental question: Are companies earning more or less than investors expected? As this quarter demonstrated, strong corporate earnings can outweigh even significant geopolitical uncertainty.
Thank you for your continued trust and confidence. As always, please don’t hesitate to call if you need to discuss something—that’s what we are here for.
Enjoy your summer!
*As measured by Vanguard 500 Fund (VFIAX)
**As measured by Vanguard Total International Stock Market (VTIAX)
***As measured by DFA 5-Year Global Fixed Income Portfolio (DFGBX)
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.