​We have all endured the COVID-19 pandemic for over a year now, and the one-year return data is beginning to reflect the significant come back we have witnessed in the stock market. It appears fiscal policy has effectively bridged the income gap between massive job loss in the services sectors and the broad vaccine distribution that has hastened the reopening of the economy.

Within the equity markets, cyclical sectors continued their end-of-year momentum, notably outperforming the more stable growth sectors. The S&P 500 returned 6.17% in Q1 2021. Excitement around impending economic reopening is driving earnings-growth expectations and pricing for the more economically-sensitive areas of the market. In addition to value stocks outpacing growth, small and mid-cap stocks beat the large-cap indices. Overseas, the European economy contracted once again as rising infection rates led to renewed lockdowns. Despite the weaker economy, European equity markets performed well, with investors looking beyond these near-term issues to a broader reopening over the summer.

In the bond market, the continued rise of longer-term interest rates has had a negative influence on bond prices. While the U.S. Federal reserve has kept short term rates near zero since March 2020, 10-year treasuries (a proxy for long term interest rates) bottomed at 0.52% in August 2020 but ended March 2021 at 1.74%. The economic recovery and potential inflation rising as a result of spending initiatives has played a role in this rise and this trend could continue if economic growth and inflation accelerate through 2021.

The most important factor for equity investors is the underlying investment environment. The outlook for inflation, interest rates and unemployment all play a key role here. Thus far, the level and direction of these components remain favorable for the economy and equity markets. It is our opinion that investors maintain course and stay invested within their plan. It is unlikely that the levels of return that we have witnessed over the last year continue at the same pace going forward, but that doesn’t mean stocks should be abandoned. Also, while we have seen a headwind to bonds, investors should not look at this as a reason to eliminate safe assets from their portfolio. Recognize that the balance in a portfolio is done to not only diversify but to provide ballast in times of both prosperity and unpredictability.


A new study finds that automatic enrollment not only triples the participation rate of new hires, but that over time the vast majority increase their deferral rates. The report –“Automatic enrollment: The power of the default” by researchers at Vanguard, found that among new hires, participation rates triple to 91% under automatic enrollment, compared with 28% under voluntary enrollment. Over time, 9 in 10 participants increase their deferral rates, either automatically or on their own, and more than three-quarters of participants remain exclusively invested in the default investment fund. The study is based on 813,918 newly hired eligible employees in 520 plans, specifically those hired between Jan. 1, 2017, and Dec. 31, 2019, and who were still employed by the plan sponsor as of June 30, 2020.

Automatic enrollment raises plan participation rates most dramatically among young and low-income workers. Consider that even those earning less than $15,000 had a participation rate of 82% under automatic enrollment versus 4% under voluntary enrollment. Similarly, 9 out of every 10 employees younger than 25 were plan participants under automatic enrollment, compared with fewer than 2 in 10 under voluntary enrollment. Ultimately, the research found most notable the fact that among eligible employees, automatic enrollment plus an automatic increase feature generally lead to higher employee contributions over time.


The Setting Every Community Up for Retirement Enhancement (SECURE) Act changed the age when individuals must begin taking withdrawals from their retirement accounts. Someone born on or before June 30, 1949, was required to start taking Required Minimum Distributions (RMDs) for the year they reached age 70 ½. However, under the SECURE Act, if a person’s 70th birthday is July 1, 2019, or later, they do not have to take their first RMD until the year they reach age 72.

Individuals who reached age 70 ½ in 2019 or earlier did not have an RMD due for 2020; however, for 2021, they will have an RMD due by Dec.31, 2021.

Individuals who did not reach age 70 ½ in 2019 and who will reach age 72 in 2021 will have their first RMD due by April 1,2022, and their second RMD due by Dec. 31,2022. The IRS notes that to avoid having both amounts included in income for the same year, a taxpayer can make the first withdrawal by Dec. 31, 2021 and the second withdrawal by Dec. 31, 2022. After the first year, all RMDs must be made by Dec. 31.