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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: Q3 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.
The screen fades to reveal a chart labeled Q3 experienced higher performance in all equity categories. A line animates on representing the S&P 500’s performance, reaching a new peak.
Global stocks leapt higher in the third quarter of 2024, with U.S. large cap stocks hitting multiple new all-time highs and they continued to lead for the year. But perhaps the most interesting news was the change of leadership.
Three more lines animate on representing MSCI EAFE Index for international stocks, MSCI Emerging Markets Index for emerging markets, and the Russell 2000 Index for U.S. small caps. They all reached new highs as well.
The third quarter saw higher performance in every other equity category, such as emerging markets, international small and large cap, and U.S. small cap.
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Much of the excitement was due to the anticipation of and finally the delivery of a 50-basis point or a one-half of one percent rate cut by the U.S. Federal Reserve on September 18th.
The video cuts to another chart labeled Falling interest rates sent bond prices higher. The chart shows the 10-year yield in percentage points over the past year.
Fixed income also rose, as falling rates sent bond prices higher and led to a brief return to a normal, un-inverted 2-year and 10-year Treasury yield curve for the first time since July of 2022, which at over two years, was the longest period that that yield curve had ever been inverted.
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Historically, the normalization of the yield curve—meaning longer term interest rates revert to being higher than shorter term interest rates—has occurred during or before a recession, which the Federal Reserve is desperately trying to avoid by engineering a soft landing.
The video transitions to another chart labeled U.S. and international REITs were the top performers this quarter. It shows the return percentages for the Dow Jones Equity All REIT Capped Index and the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index with a sharp rise over the past year.
However, the star of the third quarter and perhaps the greatest beneficiary of lower interest rates, were U.S. and international REITs, or Real Estate Investment Trusts, which were by far the best performing asset category.
The prevailing wisdom is that lower financing costs and attractive valuations—after the market punished REITs in 2022 and into 2023—suggest attractive returns in the future.
The video cuts back to the host. A transparent background slides in from the right and text appears: All Schwab Intelligent Portfolios rose in value in Q3.
With every asset class in our investment universe delivering positive returns in the third quarter, all Intelligent Portfolios saw positive returns, with global models beating their U.S.-focused counterparts due to higher returns of international stocks and some international bonds.
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As we enter the final quarter of 2024, all strategies are in positive territory for the year, as well.
An animated transition reveals a square that reads Looking ahead. That screen fades to reveal the host.
Looking ahead, the Intelligent Portfolios are designed to help our clients achieve their investment objectives over the long term, irrespective of current events or day-to-day market movements.
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Nevertheless, we will be watching to see if the Federal Reserve delivers another rate cut or two before year-end, watching what an escalation in tensions in the Middle East could mean for market volatility, and of course, the U.S. election, and its potential impact on fiscal and tax policy in the coming years.
An animated transition reveals a square that reads: Additional Resources.
We are here 24/7. Contact a service professional at (855) 694-5208.
Learn more. Investing Insights blog at schwab.com/intelligent-insights.
Volatility strategies and FAQs at schwab.com/downturn.
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 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.
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Investment and Insurance Products Are: Not FDIC Insured • Not Insured by Any Federal Government Agency • Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or any of its Affiliates • Subject to Investment Risks, Including Possible Loss of Principal Amount Invested
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.
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.
Diversification, asset allocation, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.
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.
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