Zephyr Financial Solutions

Zephyr Releases PSN Top Guns List Highlighting Best-In-Class Separate Accounts, Managed Accounts and Managed ETF Strategies

Nine out of ten top plan sponsors count on PSN for accurate SMA data

Growing Consensus for a “Soft-Landing” Boosts Stocks

The increased likelihood that the U.S. economy will avoid falling into a recession despite higher interest rates propelled U.S. equities (Russell 3000 index +8.39%) to another strong quarter. The Federal Reserve (Fed) raised rates 25 basis points in May, but the central bank agreed to a “hawkish pause” in June as inflation showed signs of moderating.

Corporate bonds, measured by the Bloomberg Barclays U.S. Aggregate index, fell a -0.84% during the quarter as U.S. economic growth beat expectations and a “soft landing” scenario has become the market consensus.

Despite concerns about the U.S. debt ceiling during the first part of the second quarter, the strong 2023 U.S. equity rally raged on. Investor optimism grew during the quarter on hopes that the U.S. economy will remain resilient and perform a “soft-landing”. Benefiting from the hot information technology sector, the growth style (Russell 3000 Growth index +12.47%) continued its dominance over the value style (Russell 3000 Value index +4.03%). Excitement over artificial intelligence (AI) and the impact it will have on the broader technology sector, particularly chipmakers, drove prices higher. Meanwhile, defensive sectors like energy and utilities underperformed. Below are some of the strategies that make up the PSN Top Guns Large Core Equity Universe.

  • UBS Asset Management: US Equity Opportunity Unconstrained (+12.6% for the quarter)
  • Waycross Partners: Waycross Focused Core Equity (+12.4% for the quarter)
  • Mastrapasqua/M Capital Advisors: Large Cap Core Equity (+12.0% for the quarter)

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Developed foreign shares, represented by the MSCI EAFE index (+3.22%), lagged U.S. shares during the quarter while emerging market shares underperformed after posting a +1.04% return (MSCI Emerging Markets index). The European Central Bank (ECB) raised interest rates twice during the quarter, bringing its key refinancing rate to 4.0%. Like U.S. markets, shares of information technology companies outperformed. The information technology sector received a boost from semiconductor stocks as the chipmakers benefited from the excitement of AI. Furthermore, the MSCI Japan index posted a +6.45% return during the quarter as the Nikkei hit a 30-year high on ongoing expectations of corporate governance reforms and structural changes in the Japanese macro environment. The following strategies made the PSN Top Guns list for the Japan Universe.

  • Goldman Sachs Asset Management: Japan Strategic Equity (+13.8% for the quarter)
  • Sumitomo Mitsui DS Asset Mgmt Co. LTD.: DS Japan Eq. Fundamental Active (+8.5% for the quarter)
  • RBC Global Asset Management: RBC Japan Equity (+7.4% for the quarter)

While the Fed paused its interest rate hikes in June, other global central banks continued to raise their key interest rates. With market consensus growing that the U.S. economy will be able to perform a soft landing, Treasury yields rose during the quarter. The Treasury yield curve inverted further as 2-year Treasury yields rose to 4.87% while 10-year Treasury yields rose to 3.81%. While posting a -0.84% return (Bloomberg Barclays U.S. Aggregate index), U.S. investment grade bonds outperformed Treasuries (ICE BofA US Treasury index -1.41%) during the quarter. High yield corporate bonds, represented by the ICE BofA US High Yield Master II index (+1.63%) was the top performing fixed income style. Below are some of the strategies that make up the PSN Top Guns High Yield Universe.

  • Advisors Asset Management: Credit Opportunities (+5.5% for the quarter)
  • L&S Advisors, Inc.: High Yield Fixed Income (+4.3% for the quarter)
  • Polen Capital Management, LLC: Polen DDJ Total Return Credit (+3.9% for the quarter)

The complete list of PSN Top Guns winners and an overview of the methodology, can be found here.  If you do not have a login, you may register for complimentary access.  If you would like to learn more about becoming a part of the PSN SMA database to showcase your strategies to thousands, visit the PSN section of this website.

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PSN Top Guns quarterly commentary is presented by Zephyr's Market Strategist Ryan Nauman whose analysis and research has been shared on financial industry media including WealthManagement.com, Reuters, CNBC, Bloomberg, MarketWatch.com, Yahoo! Finance, and the Wall Street Journal, while being a regular guest on TD Ameritrade Network, Yahoo! Finance, Bloomberg TV, Bloomberg Radio and Chuck Jaffe’s Money Life podcast.