Despite posting just a small loss in April (-0.68%), U.S. equity markets were rocked by volatility for much of the month. This all began with President Trump’s “Liberation Day” announcement, which proposed tariffs on all U.S. trading partners that were well above what market participants anticipated. The announcement sent U.S. stocks tumbling and volatility soaring to levels not seen since the depths of the COVID-19 pandemic. Fortunately, volatility was short-lived, as U.S. markets recouped a good deal of their losses following a 90-day pause on tariff implementation and a surprisingly robust start to Q1 earnings season. Non-U.S. stocks fared meaningfully better, with the MSCI EAFE index and MSCI Emerging Markets index both ending the month in positive territory. Non-U.S. asset performance was largely supported by weakness in the dollar, which fell by more than 4% in April alone. On the fixed income front, U.S. investment grade bonds eked out a gain of 0.39%, despite the yield on the 10-year treasury swinging by as much as 60bps throughout the month.
Equity
While U.S. equities were able to pull themselves out of correction territory in the latter part of April, the S&P 500 ended the month with a YTD loss of 5.63%and is down roughly 9% from its February high. From a style standpoint, value stocks took a step back during the month, declining by just over 3%. Returns were led lower by the energy sector, which fell by 13.65%, as global recession fears weighed on oil prices. Growth stocks gained 1.77%, buoyed by strong earnings reports from several “Magnificent 7” names. That said, value stocks still maintain a sizable lead over their growth counterparts on a YTD basis (-0.98% vs. -8.37%, respectively).
Non-U.S. stock leadership continued to be a trend in April, with developed non-U.S. stocks gaining 4.58% and emerging markets names advancing by 1.31%, both in USD-terms. Although both asset classes saw marginal losses in local terms, dollar weakness helped prop up results for U.S.-based investors. A growing lack of confidence and heightened uncertainty around the U.S. economy led the dollar to weaken by more than 4% versus the EAFE-basket of currencies and roughly 1.5% versus the emerging basket.
Fixed Income
Investment grade bonds gained 0.39% in April, led higher by strong performance out of U.S. treasuries. Although yields rose as much as 60 bps from “Liberation Day” to April 11th, they ended the month lower than where they began, with the U.S. 10-year treasury yielding 4.17% at the close on April 30th. U.S. high yield bonds were one of the biggest laggards on the month (-0.02%) as increased equity market volatility sent spreads to levels last seen in late 2023. However, similar to treasury yields, credit spreads did decline later in the month as tariff concerns and volatility dissipated. Emerging markets local bonds were the month’s best performing fixed income asset class, gaining 3.25% in April. They also maintain a sizable lead over U.S. investment grade bonds on the year (+7.70% vs. +3.18%), with returns being supported by a weakening dollar and their yield advantage over the Bloomberg Aggregate Bond index.
Real Assets
Broad-basket commodities were an underperformer on the month (-4.81%) after posting attractive returns in the first quarter of 2025. While gold continued its march higher, gaining nearly 6% in April, crude oil sold off by more than 17% on global recession concerns.
Closed End Funds
Closed end funds took a step back in April, as widening credit spreads and an uptick in equity market volatility led to wider discounts. At a universe level, discounts widened across all major asset classes, ending the month at an average of 5.1% compared to 4.4% on March 31st. Most notably, taxable bond funds saw discounts widen by more than 100 bps on average, ending the month at 2.4% below NAV. While this is a clear improvement in the valuation picture, the asset class has historically traded at an average discount-to-NAV of 4%. Conversely, municipal bond funds saw their average discount widen by just 30 bps to 6.5% below NAV, compared to a long-term average of 4.1%.
iCM Tactical Strategies
iCM’s tactical strategies, which utilize ETFs and/or mutual funds, experienced mixed relative performance during the month, but strong relative results on a YTD basis. In April, our equity strategy experienced headwinds from a relative overweight to value stocks, as well as an out-of-benchmark position in broad-basket commodities. Our fixed income allocation benefited from an out-of-benchmark position in emerging markets local bonds, while a modest underweight to duration detracted from relative performance. For more detailed attribution information please reach out to a member of the ICM Advisor Services team.
Important Disclosures
Integrated Capital Management, Inc. is an SEC Registered Investment Advisor. Registration does not imply any certain level of skill or training. Monthly “Market Flash” is intended solely to report on various investment views held by Integrated Capital Management. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security.
Past performance is no guarantee of future results. Please note that investments in foreign markets are subject to special currency, political, and economic risks. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
Asset Allocation Outlook is intended solely to report on various investment views held by Integrated Capital Management. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security. Outlook may change at any time given shifting market conditions. Past performance is no guarantee of future results. Please note that investments in foreign markets are subject to special currency, political, and economic risks. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
Closed end funds are exchange traded, may trade at a discount to their net asset values and may deploy leverage. When the strategy purchases shares of a closed-end fund at a discount to its net asset value, there can be no assurance that the discount will decrease and may possibly increase. If a closed-end fund uses leverage, increases and decreases in the value of its share price may be magnified. Distributions by a closed-end fund may include a return of capital, which would reduce the fund’s net asset value and its earnings capacity. Closed end funds are offered by prospectus. The prospectus and/or other applicable offering documents contain this and other important information about the investment strategy. You should read the prospectus and/or other applicable offering documents carefully before investing. Investors should consider the investment objectives, risks, charges and expenses of the investment strategy before investing. iCM uses third-party data that is believed to be accurate and complete. All data is subject to change.
All investing involves the assumption of risk and the possible loss of principal. The main risks as it pertains to iCM’s strategies are US equity risk, international equity and fixed-income market risk, interest rate risk and currency risk. While attempting to achieve the objectives of the strategies, investors will be exposed to the risk of loss from these sources along with others yet to be identified.
TICE Blended Benchmark comprised of 32% S&P 500/8% MSCI EAFE/38% Bloomberg Aggregate Bond/20% Bloomberg Municipal Bond/2% Cash
FTSE NAREIT All Equity REITs TR = U.S. REITs
S&P 500 Index = U.S. Large Cap
Russell 1000 Growth TR = U.S. Large Growth
Russell 1000 Value TR = U.S. Large Value
Russell 2000 Index = U.S. Small Cap
MSCI EAFE ND USD = Developed International Equities
BC High Yield Corp Bond = High Yield Bonds
BBgBarc Municipal TR = Municipal Bonds; BBgBarc
US Credit TR = U.S. IG Corp Bonds
BC Aggregate Bond = U.S. Taxable Bonds
Barclays Treasury TR = U.S. Treasury Bonds
MSCI Emerging Markets ND USD = Emerging Markets Equities;
JPM GBI EM Glbl Divers TR = EM Bonds;
Bloomberg Commodity TR USD = Broad Basket Commodities
First Trust Composite Closed-End Fund TR Index = Closed End Funds
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