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Wilshire 5000 ends 2019 with record $7.5tn annual gain, fueled by gains four quarters in a row

Friday, January 03, 2020
Opalesque Industry Update - The Wilshire 5000 Total Market Index, the original pure and complete measure of the U.S. stock market, rose 2.93 percent in December, 9.08 percent fourth quarter and 31.02 percent for the year, closing 2019 at 32,948.41.

This quarter's performance marked the fourth consecutive gain, boosting annual gains to the best since 2013.

Without dividends reinvested, the index had an estimated market value monthly gain of $900 billion for December, quarterly gain of $2.7 trillion and a record $7.4 trillion gain for 2019, according to Wilshire Associates Incorporated (Wilshire), a diversified global financial services firm.

"Economic data that exceeded expectations, in combination with early progress on trade negotiations, led to continued positive momentum in December. The Wilshire 5000 hit nine all-time highs this month alone, of 27 in 2019 that helped power the best annual percentage gain in six years and a record high annual dollar gain for the index," said Jason Schwarz, President of Wilshire Analytics and Wilshire Funds Management.

Small-cap beat large-cap for the month but not the quarter, nor for the year, as represented by the Wilshire US Small-Cap Index and Wilshire US Large-Cap Index with large-cap gains of 2.91, 9.09 and 31.51 percent, respectively, versus small-cap returns of 3.01, 9.01, and 26.21 percent, respectively. 2019 marked the third consecutive year, and fifth of the last six to see large-cap best small-cap.

Large-cap value outperformed large-cap growth for the month, as represented by the Wilshire US Large-Cap Value Index and Wilshire US Large-Cap Growth Index, with a 2.97 versus 2.85 percent gain, respectively. For the quarter and year, large-cap growth outperformed large-cap value with gains of 11.24 and 35.79 percent versus 7.12 and 27.72 percent, respectively. On balance, large-cap growth outperformed large-cap value eight of 12 months in 2019 to help fuel the index to best performer for 2019.

Small-cap value outperformed small-cap growth in December, as represented by the Wilshire US Small-Cap Value Index and Wilshire US Small-Cap Growth Index, with a 3.46 versus 2.54 percent gain. For the quarter and year, small-cap growth beat small-cap value with gains of 10.08 and 29.49 percent, respectively, versus 8.03 and 23.08 percent, respectively.

Sectors

All sectors posted monthly gains for the first time since June 2019. Industrials performed worst, rising 0.04 percent in December.

In 2019, Energy clocked 10 of twelve months as either a top- or bottom-three performer, more often than did any other sector. Fourth quarter, Energy climbed from worst performing sector in October, and second worst in November to nab the top sector spot in December, gaining 6.78. Though ultimately not a bottom-three performer for the quarter, Energy fell for the second year in a row to worst sector of the year, gaining 9.58 percent.

Information Technology took second-best sector for the third month in a row, gaining 4.15 percent and powering a second-best sector performance for the quarter, up 14.33 percent. Eight months in a top-three sector slot cemented Information Technology as best performing sector for 2019, gaining 49.64 percent.

Health Care came in third for the month, gaining 3.56 percent. Top sector performance in both October and November landed Health Care in the top spot fourth quarter, up 15.45 percent; however, in a sharp turn from best sector performance in 2018, Health Care's three consecutive quarters in the bottom-three netted a second worst performance for the sector in 2019, up 22.22 percent.

Real Estate repeated its turn as second worst sector in December. December 31st trading shifted the sector's negative monthly and quarterly returns positive, netting 0.75 and 0.48 percent gains, respectively, and cementing a second worst performance for the quarter.

Utilities fell to worst fourth quarter sector, up 0.36 percent, pulled down by bottom-three performances in both October and November.

Business Development Companies (BDCs)

Business development companies, represented by the Wilshire Business Development Company Index, rose for the ninth month this year with a 1.24 percent gain in December that pushed quarterly gains to 3.25 percent. Fourth quarter marks the fourth consecutive positive quarter, driving annual performance to the best since 2012 with a 28.28 percent gain.

Real Estate

U.S. public real estate, as represented by the Wilshire US Real Estate Securities Index and Wilshire US Real Estate Investment Trust Index fell -0.64 and -0.68 percent, respectively, in December. The month's losses held returns negative for the quarter as well, down -1.07 and -1.14 percent, respectively; further, annual gains retracted to net 25.79 and 25.76 percent, respectively. International public real estate, represented by the Wilshire Global exUS Real Estate Securities Index, bested U.S. real estate for the third month in a row, posting a 2.68 percent gain for the month and buoying returns for both the quarter and year with gains of 5.67 and 21.29 percent, respectively.

Fixed Income

Bonds, represented by the Wilshire Bond Index, closed out 2019 with a 0.13 percent gain in December, which boosted quarterly and annual gains to 0.63 and 11.51 percent, respectively.

Risk Parity

Multi-asset class risk parity, represented by the Wilshire Risk Parity - 10%, 12%, and 15% Target Volatility Indexes, rewarded higher risk for the eighth of twelve months in 2019 with 1.84, 2.19 and 2.74 percent December gains, respectively. Fourth quarter posted gains at 1.38, 1.45 and 1.33 percent, respectively. Wilshire Risk Parity - 15% Target Volatility bested lower volatility eight of twelve months to end 2019 as second best performer of all Wilshire indexes tracked, gaining 33.78 percent for the year. Wilshire Risk Parity - 10% and 12% Target Volatility Indexes netted annual gains of 24.30 and 28.55, respectively.

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