The following is Sit Investment Associates’ quarterly global outlook and strategy summary. This summary contains the collective opinions of our analysts and portfolio managers and is provided for informational purposes only. At the end of each calendar quarter, the full publication is available. While the information is accurate at the time of writing, such information is subject to change at any time without notice, and therefore, so may the investment decisions of Sit Investment Associates.

Global Outlook and Strategy

January 10, 2012

U.S. equity markets turned in solid performance in December concluding a difficult year on a positive note. Fixed income markets capped off a very strong year with solid performance in December. Taxable bonds rose +1.1 percent and municipal bonds increased +1.9 percent during the month. The MSCI EAFE Index finished a difficult year with an increase of  +3.3 percent  in the fourth  quarter  and  a decline  of  -12.1 percent for the year. Continued investor fear about Europe’s sovereign debt issue sent that region into negative territory and weighed down markets around the world. Regarding the U.S. economy, the final estimate of third quarter 2011 real GDP growth was revised down to +1.8 percent from the second estimate of +2.0 percent. Our forecast for a subpar economic recovery remains in place for the U.S. and most other regions of the world. We are selective in Europe and believe that China and emerging markets will continue to be the growth engines for the world. In taxable fixed income portfolios, we expect to become more defensive against the eventual rise in longer term U.S. Treasury yields after Operation Twist comes to a close in the spring. Our investment strategy in municipal portfolios remains focused on income, which is the primary source of return over longer periods of time. Sit Investment Associates’ domestic and international equity portfolios are maintaining holdings in diversified, high-quality and growth-oriented common stocks.  

For a complete copy of the latest quarterly summary, click here: Global Outlook and Strategy (Adobe Acrobat) or e-mail us at: siainfo@sitinvest.com.