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First Quarter 2015 Equity Market Review

During the first quarter of 2015, global equity markets generally advanced as familiar themes such as lower oil prices, a strong U.S. dollar relative to most other currencies and the divergence of central bank policies continued to dominate the headlines and contributed to market uncertainty. In the U. S., equity markets were volatile as the S&P 500® Index suffered declines in January, recovered nicely in February and then declined again in March, resulting in an overall quarterly return of 0.95% which brought the one-year trailing return to 12.73%. The broader U.S. market, as measured by the Russell 3000® Index, posted returns of 1.80% for the quarter and 12.37% for the one-year trailing period.

From a sector perspective, performance was biased to the upside as six of nine sectors within the Russell 3000® Index advanced during the quarter. The best performance came from the health care and consumer discretionary sectors, while the weakest performance was experienced within the energy and utilities sectors. The weakness within the utilities sector represents a reversal from 2014 when the sector was among the strongest performers.

Companies with higher P/E, higher earnings growth and higher return on equity characteristics generally outperformed during the quarter. In terms of equity market capitalization, small-cap companies outperformed their large-cap counterparts by a wide margin as the Russell 2000® Index posted a first quarter return of 4.32%, while the Russell 1000® Index advanced 1.59%. Style differentiation was evident in the quarter as growth-oriented stocks outperformed value-oriented stocks across all market capitalization segments. In the large capitalization segment, the Russell 1000® Growth Index and Russell 1000® Value Index had quarterly returns of 3.84% and -0.72%, respectively. In the small capitalization segment, the Russell 2000® Growth Index posted a stellar first quarter return of 6.63%, while the Russell 2000® Value Index advanced 1.98%.

Developed non-U.S. markets outperformed their U.S. counterparts and ended a volatile quarter with solid gains as the MSCI-EAFE Index (Net), a measure of international developed country returns, posted a first quarter return of 4.88%, bringing the one-year return to -0.92%. Small capitalization stocks generally outperformed large capitalization stocks and growth styles outperformed value styles. All regions ended the period in positive territory. From a country perspective, the best performance was experienced in countries such as Denmark and Japan which generated double-digit gains, while Israel and Germany also performed well during the quarter. The only countries which experienced negative performance for the quarter were Singapore, New Zealand, U.K. and Spain. From a sector perspective, eight of ten sectors were positive during the quarter. The best performance came from the health care and consumer discretionary sectors, while energy and utilities were the two sectors which posted negative returns for the period.

Emerging markets underperformed developed markets but registered a positive return as the MSCI Emerging Markets Index (Net) posted a quarterly return of 2.24%, bringing the one-year trailing performance to 0.44%. From a country perspective, Russia, Hungary and the Philippines were among the best performers, while Greece, Columbia, Brazil and Turkey were among the weakest performers for the quarter. Seven of ten sectors posted positive results during the period. The technology and health care sectors were the strongest performers, while the utilities, materials and financials sectors registered negative returns and were the weakest performers for the quarter.


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S&P 500® is a trademark of The McGraw-Hill Companies and has been licensed for use by GuideStone Funds. The Equity Index Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of purchasing the Equity Index Fund.

All indices are unmanaged and not available for direct investment. Index performance assumes no taxes, transaction costs, fees or expenses. This update is prepared for general information only and it is not to be reproduced.

GuideStone Capital Management, a controlled affiliate of GuideStone Financial Resources, serves as the investment adviser to GuideStone Funds.