The unexpected election results startled the financial markets and had significant effects on the returns for the three month period ending November 30th. The prospect of some combination of tax cuts and increased spending spooked the bond market – interest rates rose and, as a result, bonds had a poor quarter, with the aggregate bond index falling 3%. REITs were also adversely affected.
US stocks rose modestly for the quarter; the rise was particularly sharp for asset classes that are perceived to be the beneficiaries of higher interest rates and spending on infrastructure (small cap and natural resource stocks, as well as financials). The higher interest rates pulled the dollar higher, and, consequently, international investments took a hit. Both developed and emerging market stocks ended the quarter with small losses.