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2022 Year-End U.S. Equity Letter from Haruki Toyama

The U.S. stock market suffered one of the worst annual losses in its history, with the S&P 500, Russell Midcap, and Russell 2000 declining -18.11, -17.32%, and -20.44%, respectively. Headlines point to many culprits, but higher interest rates dominate the conversation. We’ve had four decades of declining interest rates; it’s no coincidence that with rates rising sharply this past year, the S&P 500 Index had its third worst year in the past 40 years.

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Madison Client Communication | 4Q 2022

After a challenging first three quarters, markets rebounded in the fourth quarter, with the S&P 500 Index rising 7.6% and the Bloomberg Aggregate Bond Index rising 1.9%. For the year, the S&P 500 fell 18.1% and the Bloomberg Aggregate Bond Index fell 13.0%. In 2022, there was no shortage of headwinds to both equity and fixed income markets – high inflation, higher interest rates, a war in Ukraine, China lockdowns, and supply chain issues. Looking ahead to 2023, uncertainty is likely to persist, and whether or not we get clarity on some or all of these factors, navigating the volatility will again call for an eye on all portfolio risks.

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When Investment Management Becomes a Partnership

For insurance companies, investment management does not reside in a vacuum. Each entity faces unique circumstances, and to obtain a favorable investing outcome, an insurance company must identify, understand, and manage all the risks involved. This is done through Enterprise Risk Management (ERM). The list of potential risks is long, and they are all interconnected.

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Madison Client Communication | 3Q 2022

The S&P 500 remained erratic, finishing the second quarter down 16.1%, bringing the year's total to 20.0%. With a 75 basis point increase in June and another one anticipated in July, the Federal Reserve has begun its aggressive monetary tightening to reduce inflation. By the end of the year, the Fed Funds Rate is anticipated to reach 3.38 %. Much of these anticipated movements have been priced in by the bond market, yield curve, and equities markets.

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"Time in the market, not timing the market"

It's a timeless lesson that we're taught at an early age and that advisors preach to their clients regularly. The beauty of this simple lesson is that we have troves of data to show the impact of an equity investor staying fully invested. Specifically, the impact on your total return when you are not invested during the best-performing days and the stock market's sneaky history of recovering following major price declines.

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Inflation and Profitability in the New Economy

U.S. Equity Investor Letter for the Second Quarter of 2022 After hitting an all-time peak on the first trading day of 2022, it’s been all downhill for the S&P 500 index since. In fact, the 19.96% drop through the end of June is the worst first half of a calendar year for the index in over 50 years. Our equity strategies have generally remained true to form during this downturn, with both our flagship Large Cap and Mid Cap strategies losing less than their respective benchmarks in the year-to-date period, though that may be little consolation.

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Madison Client Communication | 2Q 2022

The S&P 500 remained erratic, finishing the second quarter down 16.1%, bringing the year's total to 20.0%. With a 75 basis point increase in June and another one anticipated in July, the Federal Reserve has begun its aggressive monetary tightening to reduce inflation. By the end of the year, the Fed Funds Rate is anticipated to reach 3.38 %. Much of these anticipated movements have been priced in by the bond market, yield curve, and equities markets.

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Macroeconomic Update - April 2022

Investment Perspectives for Insurance Companies. At an industry conference last month, Madison Portfolio Manager Jeff Matthias shared the following macroeconomic update, including the firm’s thoughts on monetary policy, inflation and unemployment, household and business outlook, risk of stagflation and/or recession, and a general outlook for both the economic and credit cycles.

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