Photo Credit: Hatice Baran
INVESTMENT ENVIRONMENT1
Source: Orion Advisor Services, AlphaGlider
Developed market equities experienced their third consecutive strong quarter, led by continued strength from the largest US technology firms. The technology-heavy Nasdaq-100 Index^f was up 15.2% in the second quarter of 2023, helping to propel the US equity market, as measured by the S&P 500 by 8.6%,a. Emerging market equities (MSCI Emerging Markets)c lagged their developed market peers once again, but were still able to end up for the quarter, +0.9%.
Most US bonds sank in the second quarter as core inflation remained stickier than expected, causing many central banks around the world to guide to more rate increases to come. The Bloomberg US Aggregate Bond Indexe fell by -0.8%.
Despite calendar 2022 being a poor year for equities, the global equity index, MSCI ACWI IMI,d was up 16.1% over the last 12 months on the strength of developed markets. The US (S&P 500) and foreign developed equity markets (MSCI EAFE)b were up 19.0% and 18.8%, respectively. Emerging market equities (MSCI EM) were up a modest 1.8%, dragged down by the large Chinese market which was down 17.9%, as measured by the iShares MSCI China ETF (MCHI).2
Over the last year US bonds were mixed, with short duration bonds generally up and longer duration bonds down. The Bloomberg US Aggregate Bond Index dropped -0.9%.
Global investors entered the second quarter worrying about three large major concerns: 1) high and rising rates pushing economies into recession, 2) fragility within the US and European banking sectors, and 3) the risk of a US debt default caused by US debt ceiling negotiations. Fortunately, none of three materialized, allowing risky assets to surge forward. Let’s take a look at each of these concerns and where they stand now:
1) High and rising rates pushing economies into recession
Source: @ianRHarnett, Absolute Strategy Research
As I have written before, one of the most reliable predictors, and perhaps causes, of a recession is an inverted yield curve. And as a reminder, an inverted yield curve is when short-term rates are greater than long-term rates — which is the case in the extreme right now in the US. The chart to the right shows a century of the yield spread between the 10-year and 3-month Treasuries, along with periods of recession. All eight US recessions since 1970 were preceded with little delay by an inversion (i.e. negative spread) of 10-year and 3-month Treasuries, without a single case of an inversion occurring without a subsequent recession.
Short-term rates, like the 3-month Treasury, are effectively set by the Federal Reserve (Fed) with its federal funds rate, with the specific goal to either stimulate, slow down, or maintain the pace of economic growth. Prior to each of these previous eight recessions, the Fed was trying to slow down inflation, or head off its feared rise, by slowing down the economy with its rate increases — just like it is doing today. Triggering a recession is never the goal of the Fed, but often a byproduct of its attempts to reign in inflation. The US economy has held up remarkably well in the face of the Fed’s 500 basis points (5 percentage points) of rate increases since early 2022, defying many who predicted a recession by now. The pandemic and the many aggressive fiscal and monetary actions taken by the US government appear to be playing important roles in the resilience of the economy. Households went into this period of Fed rate increases with high levels of savings, thanks to pandemic relief programs. Companies extended the maturity of their debt while rates were low in 2020 and 2021, making them less vulnerable to today’s higher interest rates. Low-interest mortgage holders are keeping their homes off the market, constraining supply. Moreover, government infrastructure and energy transition programs have stimulated the industrial and construction sectors.
Source: Axis Visuals, AlphaGlider
The Fed’s rate increases have started to roll back the inflation rate, but June’s 4.8% core annual inflation rate (i.e. excluding volatile food and energy prices) remains well above the Fed’s 2% target — see the chart to the left. Thus the Fed’s continued mantra of “higher for longer” when it comes to their federal funds rate, and thus “more inverted for longer” when it comes to the yield curve. We have seen Germany, the Eurozone as a whole, and New Zealand each fall into technical recessions (i.e. two consecutive quarters of contracting gross domestic product) in 2023. So while the US economy staved off recession in the first half of 2023, we believe it is still not out of the woods just yet. We remain cautious on US companies given their valuations, which seem to downplay the probability of a moderately severe recession in the near future.
2) Fragility within the US and European banking sectors
Aggressive central bank rate hikes triggered significant concerns about illiquidity and financial contagion in the US and European banking sectors, and its potential knock-on effects on the global economy. The first quarter saw the bankruptcies of Silicon Valley Bank and Signature Bank, two large American regional banks, and the takeover of an ailing Credit Suisse by UBS at the request of the Swiss government. Going into the second quarter, investors were concerned there would be more trouble, especially if rates went higher for longer and/or economies went into recession. However, these concerns subsided throughout much of the second quarter, especially after JP Morgan Chase took over First Republic Bank on May 1 at the invitation of the US government. Not that investors have exactly piled back into the regional banks [see chart below for the iShares US Regional Banks ETF (IAT)], but they have grown more comfortable that the government will prevent contagious bank runs by extending temporary deposit insurance to their customers, or by leaning on larger banks to take out troubled regional banks. We remain more cautious than the overall market that the banking sector could yet be a source of instability for the economy in this “higher for longer” Fed rate environment. We are particularly concerned about their loan exposure to the troubled US commercial real estate sector.
3) Risk of a US debt default caused by US debt ceiling negotiations
Although the US had never defaulted on its debt due to the inability to raise the debt ceiling, political and investment communities held serious concerns that this could occur in 2023. House Republicans, who have a controlling majority, had been demanding spending be cut to last year’s levels, capping growth at 1% per year thereafter, and reversing some of President Biden’s policy goals before they would go along with raising the debt ceiling. In early June, with less than a week before default, a compromise emerged that was a minor deviation from the status quo. Disaster averted once again. The next brush up against the debt ceiling is not expected to occur until after the 2024 presidential election — a timeframe outside of many investors’ time horizons, but not ours at AlphaGlider.
When interest rates increase, long duration assets like long-term bonds and growth companies typically go down. That is exactly what we saw in 2022:
- interest rates increased (the fed funds rate went from 0-0.25% on 1JAN22 to 4.25-4.5% on 31DEC22; and the yield on the 10-year Treasury went from 1.76% to 3.53%)
- long-term bonds declined (the Vanguard Long-Term Treasury ETF (VGLT) fell 29%)
- growth stocks declined (the tech/growth-heavy Nasdaq-100 Index declined 33%
Through the first half of 2023 we saw short and intermediate-term rates continue to rise, however very long rates (e.g. 30 years) actually fell slightly, and long duration assets were strong, particularly tech stocks:
- short-term interest rates increased (the fed funds rate went from 4.25-4.5% on 31DEC22 to 5-5.25% on 30JUN20)
- intermediate interest rates increased (10-year Treasury yield went from 3.53% to 3.86%)
- long-term bonds (VGLT) increased 4.4%; the yield on the 30-year Treasury fell from 3.98% on 31DEC22 to 3.86% on 30JUN20
- growth stocks surged (the tech/growth-heavy Nasdaq-100 Index increased 39%)
What’s going on here with this peculiar market behavior is the emergence of generative artificial intelligence (AI) into commercial applications. You might know of generative AI by the Chat GPT chatbot service aligned with Microsoft, and Bard by Google. Generative AI is a form of neural network machine learning that can produce text, video, images, and other types of content in response to prompts. By now you have inevitably heard and read about the massive implications that this new technology may have on our economy and society, both good and bad.
Forecasting future winners and losers of a new technology is always difficult, and putting a dollar value on this forecasting is even more difficult — but that is the job we face as investors. Right now Mr. Market is extremely excited about the prospects of the early entrants in the generative AI field. This euphoria reminds me a lot about early days of the commercialization of the internet, in the mid-1990s. We all knew it would be big and massively transformative, and investors fell over each other to get exposure to its early movers. I distinctly remember the frenzy over shares in Netscape in the summer of 1995, just as I was entering business school. Founded by several programmers from the University of Illinois who had developed Mosaic, the first graphical web browser, the company had released its eponymously named web browser the year before. I remember attending a San Francisco Giants day game with one of my high school buddies the day it went public. It was due to hit the market at $14 per share, but the investment bankers doubled the price at the last minute due to all of the buzz. I do not remember if the Giants won that day, but I do recall that Netscape’s share price went through the roof — closing that day at $58.25. The shares went on to hit $174 by the end of the year, giving it an $8.7 billon market capitalization. Then Microsoft released its Internet Explorer web browser the next year, marking the beginning of the quick end for the internet’s first shooting star (see web browser market share chart below). AOL eventually put Netscape out of its misery in 1998 in an all-stock acquisition worth $4.2 billion.
So today we all know that generative AI will be big and massively transformative. And today we have seen the market piling into the few AI plays that have emerged. If there is a poster child of generative AI thus far, it would have to be Nvidia, a 30-year old company that got its start designing graphics processing units (GPUs) for the computer gaming market. Nvidia is still a big player in this market, but newer applications such as crypto mining, and now AI, have driven demand for its processors as of late. The share price of Nvidia entered 2023 at $143.97 per share, and exited the first half of 2023 at $454.69, up 216% — giving it a market cap of $1.125 trillion.
At this price, it sells for 50x forward earnings (earnings over the next 12 months), and an eye watering 23x forward sales (not to mention 43x trailing 12 month sales). To give a little perspective about what 23x forward sales means, here is a little anecdote from Scott McNealy, co-founder and CEO of Sun Microsystems, a market darling of the dotcom bubble days. In 2002 he said this to a Bloomberg reporter (paywall) about his firm trading at 10x sales during its peak in 2000:
“Two years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don't need any transparency. You don't need any footnotes. What were you thinking?”
So there are a few take-home points here. We are every bit as excited, and perhaps scared, as anyone about the impact that generative AI will have on our society, economy, and investments. However, we know that the future is hard to predict and that early leaders are rarely the ones the dominate in the long term — as we saw with Netscape and Sun (the latter acquired by Oracle in 2010 for its last remaining store of value, the Java programming language). We fear that investors may have become overenthusiastic in some of the large cap AI names, putting themselves at risk if the optimistic projections they have do not play out. We are plenty happy with our exposure to these names via large positions in our broad US market ETFs, Vanguard Total Stock Market (VTI) and Vanguard ESG US Stock (ESGV). The Big 3 AI plays, Nvidia, Microsoft, and Alphabet (Google), make up approximately 11.5% and 14% of VTI and ESGV, respectively. Our more aggressive core investment strategies also get exposure to these via our technology sector ETF, Fidelity MSCI Information Tech (FTEC), where Nvidia and Microsoft make up a combined 25% of the fund. We are not looking to go overweight generative AI at these valuations given the state of the extremely inverted yield curve.
PERFORMANCE DISCUSSION
Second Quarter
As in the first quarter, AlphaGlider investment strategies had satisfactory absolute returns in the recently completed quarter, but they fell short of their respective benchmarks. Most of our strategies appreciated by approximately 70% of those benchmarks’ gains.
While our strategies were held back by their slight underweighting of equities, it was the mix of geographic regions within our equities that most impaired our relative performance. We were underweight the strong US equity market, and we were overweight international equities which were up in the quarter, but not as much as US equities. Within our US equity exposure, we were light on the narrow band of expensive but strongly performing large technology firms, and heavy on cheaper value, quality, and smaller firms. Our more aggressive strategies were hurt by their overweight position in the bond market. And the ESG versions of our more aggressive strategies were dented by their exposure to the weak clean energy sector.
On the positive side, we benefitted by having a shorter duration in our fixed income portfolio than our benchmarks. Our emerging market bonds were strong performers and our one alternative investment, a US market neutral fund,3 also had a good quarter.
The following are individual funds that particularly helped, and hurt, our strategies’ performance during the quarter relative to our equity and bond index benchmarks (MSCI ACWI IMI +5.9% & Bloomberg US Aggregate Bond -0.8%):
Significant Relative Detractors in 2Q23:
-6.4% iShares Global Clean Energy, ICLN
-3.1% iShares MSCI Singapore Capped, EWS
-0.9% Vanguard Global Ex-US Real Estate, VNQI
+1.2% iShares ESG Aware MSCI EM, ESGE
+1.3% Vanguard Emerging Markets, VWO
+1.7% Nuveen ESG Large-Cap Value, NULV
+2.7% Vanguard ESG International Stock, VSGX
+3.1% SPDR Portfolio Developed World ex-US, SPDW
+3.6% Vanguard Value, VTV
+5.3% Vanguard Small-Cap, VB
+6.0% Vanguard Dividend Appreciation, VIG
Significant Relative Benefactors in 2Q23:
+14.8% Fidelity MSCI Information Tech, FTEC
+9.6% Vanguard ESG US Stock, ESGV
+2.2% Vanguard Market Neutral, VMNFX
+1.0% Invesco Treasury Collateral, CLTL
+0.0% iShares ESG 1-5 Yr Corporate Bond, SUSB
+0.0% Vanguard Short-Term Corporate Bond, VCSH
Last 12 Months
The relative performance of our strategies over the last year were remarkably similar to that during the second quarter. In a risk-on market, the conservative positioning of our investment strategies held back their performance relative to their respective benchmarks. Most of our strategies appreciated by approximately 75% of those benchmarks’ gains.
Once again, the allocation within our equities positions hurt relative performance over the last 12 months. We were slightly underweight equities in general, and within them we were underweight the strong US equity market, and overweight the weak emerging equity markets. Within the US market we were light on the best performers, large technology stocks, and heavy on underperforming segments such as value, quality, and small cap. Our ESG strategies were hampered by their structurally underweighting of fossil fuel companies, and our more aggressive ESG strategies were hurt by their investments in the clean energy sector.
Over the last year AlphaGlider investment strategies benefitted from their overweight positions in foreign developed equity markets. Within fixed income, our strategies were helped by their skew towards shorter duration instruments, and by their position in emerging market bonds. Our alternative investments, physical gold and long/short US equity (i.e. US market neutral) were also strong performers.
The following are individual funds that particularly helped, and hurt, our strategies’ performance during the last 12 months (LTM) relative to our equity and bond index benchmarks (MSCI ACWI IMI +16.1% & Bloomberg US Aggregate Bond +2.1%):
Significant Relative Detractors over LTM:
-8.4% Vanguard Global ex-US Real Estate, VNQI
-2.6% iShares Global Clean Energy, ICLN
+0.3% iShares ESG Aware MSCI EM, ESGE
+1.5% Vanguard Emerging Markets, VWO
+6.0% Nuveen ESG Large-Cap Value, NULV
+9.7% iShares MSCI Singapore Capped, EWS
+10.7% Vanguard Value, VTV
+11.2% Vanguard ESG International Stock, VSGX
+14.9% Vanguard Small-Cap, VB
+15.6% Vanguard Dividend Appreciation, VIG
Significant Relative Benefactors over LTM:
+36.5% Fidelity MSCI Information Tech, FTEC
+19.6% Vanguard ESG US Stock, ESGV
+16.4% SPDR Portfolio Developed World ex-US, SPDW
+6.6% Vanguard Market Neutral, VMNFX
+3.3% Invesco Treasury Collateral, CLTL
+1.7% Vanguard Short-Term Corporate Bond, VCSH
+1.5% iShares ESG 1-5 Yr Corporate Bond, SUSB
+0.2% Vanguard Short-Term Treasury, VGSH
+0.1% Vanguard ST Inflation-Protected Securities, VTIP
OUTLOOK & STRATEGY POSITIONING
With developed equity market valuations appreciably higher after a double-digit run-up in prices since the beginning of the year, stubbornly persistent inflation around the world, the escalating US debt ceiling crisis, and continued worries of banks runs in the US banking sector, we decided to trim our equity exposure in late May. AlphaGlider investment strategies had been about 5% underweight equities relative to their respective benchmarks, and these latest trades took them to about 10% underweight equities. Our strategies were already significantly underweight the expensive US equity market (~40% underweight), so all of the reduction in our equities exposure came from international markets. We still find international equities to be fairly valued to slightly undervalued, but we think they could still sell off in the near term if and when their economies fall into recession. Our positions in Singaporean equities and international real estate bore most of the selling. After these sales, our strategies are still about 35% overweight international equity markets.
With some of the proceeds from these sales we bought international bonds in the form of the Vanguard Total International Bond Fund (BNDX) across all of our strategies. This fund owns government and investment grade corporate debt in developed and emerging foreign markets with an effective duration of approximately 7.5 years. The fund hedges out all of its foreign currency risk, which we would rather not be the case, but unfortunately there are no unhedged foreign bond funds with high levels of liquidity and tight bid-ask spreads. The fund has a low expense ratio of 0.07%. We think this fund would have held up well had the US defaulted or if international markets fell into recession.
We increased the exposure to our market neutral fund in our more aggressive strategies so that they would not go too overweight bonds relative to their benchmarks. We think this fund will also hold up well if international markets fall into recession.
On Christmas Eve 2021, I blogged that all I wanted for Christmas (and New Years) that year were some Series I Saving Bonds (aka I Bonds), which I described at the time as “the best thing going right now for the ultra-safe portion of your investment portfolio.” I Bonds were paying out 7.12% interest, head and shoulders above the 0.6% being paid by the highest yielding 1-year certificate of deposits (CDs) and money market funds at the time. Even though I could not put I Bonds into our AlphaGlider investment strategies (they can only be bought directly by individuals and companies on TreasuryDirect), I carried out my fiduciary responsibility as a Registered Investment Advisor (RIA) to encourage you to go out and buy them yourself. Many of you did, and if you’re reading this, I suspect you are among them and that you likely continue to hold them.
With inflation coming down, I Bonds purchased today are “only” paying 4.3%. This interest rate is a combination of a 0.9% fixed rate (fixed for the life of the bond) and a 3.38% variable rate (changes every six months and is based on the semiannual inflation rate). So for those I Bonds we bought back in late 2021 and early 2022, the interest rate is currently 3.38% as their fixed rate was set at 0%. No longer do these I Bonds look as attractive as when we reaped a 7.12% annualized rate for their first six month period, 9.62% for their second, and 6.48% for their third as shown below (to see the history of fixed and variable rates for I Bonds, see here).
Source: TreasuryDirect, AlphaGlider
These late 2021/early 2022 I Bonds are also less attractive than short-term Treasury bills which are currently yielding over 5% while providing the same level of liquidity (very high) and safety (very high, both in terms of duration risk and default risk). This is what we are using for the safest allocation in all of our AlphaGlider investment strategies via the Invesco Treasury Collateral ETF (CLTL). CLTL’s current interest rate, as measured by the SEC yield, is 5.08%.
There are, however, some considerations to make before selling I Bonds. The first is the tax consequences of such a sale. By selling you will have to pay federal income tax on all interest earned by those bonds since the purchase date. However, one can avoid this tax if you use the I Bond proceeds to cover qualified education expenses (including funding a 529). But this exclusion phases out at a modified adjusted gross income (MAGI) between $91,850 and $106,850 (2023) for single filers and between $137,800 and $167,800 (2023) for those married filing jointly. As with other Treasuries, I Bonds are exempt from state and local taxes.
A second consideration is that you will forfeit the last three months of interest earned by the I Bonds if they were purchased within the last five years. Therefore if you are considering selling your I Bonds due to their new, lower interest rate, make sure that you do not sale them until three months after this lower rate takes effect. The easy rule of thumb to figure out this optimal sale date is nine months after you purchased them (ignoring the year). For example, the chart below shows the three lots of I Bonds that I personally bought in 2021, 2022, and 2023. I bought my 2021 I Bonds on 1NOV21, and they earned an annualized 7.12% rate for their first six months (ending 30APR22), 9.62% for their second six months (ending 31OCT22), 6.48% for their third six months (ending 30APR23), and 3.38% for their final three months (ending 31JUL23). I will sell them on or soon after 1AUG23 (nine months after their 1NOV purchase date), forfeiting three months of interest at the 3.38%. Likewise, I will sell my 2022 I Bonds on or soon after 1OCT23 (nine months after their 1JAN purchase date), forfeiting three months of interest at 3.38%. Of note in this table, the current value that TreasuryDirect shows for your I Bonds (see far right column) assumes you sell today, forfeiting that last three months of interest.
Source: TreasuryDirect, AlphaGlider
A third consideration to make before selling I Bonds is their fixed rate. The I Bonds we purchased in late 2021/early 2022 have a 0% fixed rate, so it makes it an easy decision to sell them. Not that I have the ability to sell them now as they are less than one year old, but the 2023 I Bonds I purchased on 1JAN23 have a fixed rate of 0.4% and will thus always receive 0.4% more interest than my 2021/early 2022 I Bonds. The fixed rate of I Bonds purchased today through 31OCT23 sport an even better 0.9% fixed rate, the best on offer since 2008. So if you haven’t purchased I Bonds in 2023 yet, you may want to consider doing so before the 31OCT23 deadline so that you can hold these high fixed rate I Bonds for the long term (you are allowed to hold an individual I Bond for up to 30 years). Note that in the earliest days of the I Bond, in the late 1990s and early 2000s, the US Department of the Treasury issued them with 3%+ fixed rates (again, here is that link to the complete history of fixed and variable rates for I Bonds). Those early I Bonds were especially lucrative, huh?
On a related note, I am pleased to report that the TreasuryDirect website login process has been modernized since I wrote my 2021 Christmas Eve blog post. Gone is the dreaded virtual keyboard, replaced by a one-time password sent to your email of record. TreasuryDirect, welcome to the 21st century!
**NOTES & DISCLOSURES**
1This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.
2Mutual funds, exchange-traded funds and exchange-traded notes are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained directly from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
3Alternative investments, including hedge funds, commodities and managed futures involve a high degree of risk, often engage in leveraging and other speculative investments practices that may increase risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are subject to the same regulatory requirements as mutual funds, often charge higher fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. The performance of alternative investments including hedge funds and managed futures can be volatile. Often, hedge funds or managed futures account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor’s interest in alternative investments, including hedge funds and managed futures and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products including hedge funds and managed futures often execute a substantial portion of their trades on non-US exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in the US markets. Additionally, alternative investments including hedge funds and managed futures often entail commodity trading which can involve substantial risk of loss.
4Rebalancing can entail transaction costs and tax consequences that should be considered when determining a rebalancing strategy.
^Indices are unmanaged and investors cannot invest directly in an index. The performance of indices do not account for any fees, commissions or other expenses that would be incurred.
aThe Standard & Poor's 500 (S&P 500) Index is a free float-adjusted market capitalization weighted index that is designed to measure large cap US equities. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization in the US equity markets.
bMSCI Europe, Australasia and Far East (EAFE) Index is a free float-adjusted market capitalization weighted index that is designed to measure the investable universe of developed market equities outside of the US.
cMSCI Emerging Markets (EM) Index is a free float-adjusted market capitalization weighted index that is designed to measure large and mid-cap equity market performance in the global Emerging Markets.
dMSCI All-Country World (ACWI) Investable Market Index (IMI) is a free float-adjusted market capitalization weighted index that is designed to measure the investable universe of global equity markets.
eThe Bloomberg Barclays US Aggregate Bond Index is a market capitalization weighted index that is designed to track most investment grade bonds traded in the United States. The index includes Treasury securities, government agency bonds, mortgage-backed bonds, corporate bonds and a small amount of foreign bonds traded in the United States. Municipal bonds and Treasury Inflation-Protected Securities (TIPS) are excluded due to tax treatment issues.
fThe Nasdaq-100 Index is a modified market capitalization weighted index made up of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange.
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