Q3 2020 Plan Performance
By Jim Matheu, Retirement Services Manager
The word to describe this year would have to be “resilient.” It is fitting as applied to our country, our economy, and our stock market.
At the start of 2020, the stock market and the Vista 401(k) Plan were at or near record highs, and unemployment reached lows not seen in decades. Simply put, things were going well, and America was prospering. I think we all know where the story goes from there. The Coronavirus, at first not much more than a story of interest, exploded in March 2020. Businesses were closed. Many employees were asked to work from home, and others lost their jobs. Schools were shut down, and sports seasons at all levels were cancelled. As the cases and fatalities rose, people were told to stay home, and if they did venture out, they must wear masks. It was like nothing we have ever seen. Our economy sputtered and stalled, and our stock market experienced a decline that wiped out years of gains. The predictions were dire with many experts telling us we were headed for a great depression and unemployment above 20%. They informed us that it would be years before we recouped our loses in the stock market. That appeared to be the case in March and April.
In short order, however, something remarkable happened—the month of May brought about whispers of our resilience, and by August, those voices and the stock market were roaring. The stock market was strong in June and July and very strong in August. September did see an overall decline, but the Nasdaq and the S&P 500 are at or near record highs, and the Dow is moving in that direction.
As of this writing, October has started on a positive note, financially. Most retirement plan losses have been erased not in years, but months, and the September unemployment rate dropped to 7.9%. The Vista 401(k) Plan has shared in this resiliency, reaching its highest level ever in mid-October. Now, people are talking recovery not depression, and consumer confidence continues its upward trend.
As previously mentioned, September was a down month, as it tends to be, but the quarter was solid overall. Only three of the 28 Vista 401(k) funds were down year-to-date, through September 30, 2020. They are the Fidelity International Index Fund (-6.6%), the Vanguard Small Cap Index Fund (-6.3%), and the JPMorgan Equity Income Fund (-8.1%). It should be noted that these funds have performed well over their lifetimes and compare favorably to their competition.
The American Fund Target Date Funds continue to impress. They are solid performers with strong returns that continue to beat their benchmarks. Another strong performer year-to-date is the T.Rowe Price Blue Chip Growth Fund, which is a large cap fund. It has solid fundamentals and its year-to-date return is 24.3%. However, this Blue-Chip Growth Fund is not just a short-term performer—it has a 5-year return of 19.8%.
A mid-cap fund that has caught our eye is the Fidelity Growth Strategies Fund with a year-to-date return of 12.6% and a 5-year return of 13.3%. It has posted solid returns at the 1-year and 3-year marks as well.
The Vista 401(k) Plan offers three bond funds that have been solid performers. They are the American Century Government Bond Fund, an intermediate government bond fund, the American Century Inflation-Adjusted Bond Fund, an inflation-protected fund, and the Fidelity Advisor Total Bond Fund, an intermediate term fund. All three of these funds are strong options.
I have pointed out several strong performers above, but most of the twenty-eight Vista 401(k) Plan funds exceeded their benchmarks. Those that did not exceed their benchmarks ran parallel with their benchmarks, while only a few closely lagged their benchmarks.
Please note that the Vista 401(k) Plan started the year 2020 at $256 million in total assets. On October 12, 2020, the Plan reached its high-water mark of $276 million in total assets. This stock market, our economy, and our people have been tested, and we have proven ourselves to be RESILIENT!
To conclude, we encourage you to review your account to make sure that you are appropriately invested, and in the words of Michael Sheridan, do not forget to diversify, diversify, diversify!
September 2020 Fund Performance Chart