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The Balanced Fund experienced another solid quarter, gaining 9.28% while the benchmark returned 5.88%. Our tactical overweight in equities, technology, and companies with smaller market capitalizations in March continued to deliver strong outperformance for the fund.
Expectations of a Coronavirus vaccine successfully completing Phase 3 trials appear to be baked into market expectations. News sources are more focused on when this will come to pass and how to distribute the vaccine.
Concerns of an overheating market led to a claw back of returns in September. As earlier gains in technology, health care and communications services weakened, we saw relative strength coming out of the industrial and financial sectors. Smaller market cap and value companies also showed stronger relative performance in September.
In the United States, the focus has shifted to the national elections. Polling data suggests the Democrats have a strong likelihood of winning. As we learned in the 2016 election, there may be underreporting of Trump support leading into the final month. The first presidential debate took place on September 30th. After the President contracted the Coronavirus, it seems unlikely the second scheduled debate will occur.
The bond market remained relatively stable in the third quarter after a volatile first half of the year. The Treasury yield curve continued to steepen slightly with short term yields moved lower and long-term yields rising. Corporate spreads continued their tightening trend in July and then flattened in August and September. Overall, the spread between the BBB rated bonds and the ten-year Treasury has narrowed by about 20 basis points during the third quarter.
The information contained in this article is for information purposes only, and represent the views of the author. It is not intended as specific investment or financial advice, or a recommendation or solicitation to buy or sell any security. Any investments or strategies listed in this article may not be suitable for all investors. Past performance is not indicative of future performance, and as with any investment, prices may fluctuate. It is recommended that advice is sought from a qualified investment professional prior to implementing any financial plan. LOM has made every effort to ensure that the contents herein have been compiled from sources believed reliable, however LOM does not warrant the accuracy, adequacy, timeliness, or completeness of this information expressly disclaims liability for errors or omissions in this information.
