July 2012 Market Update

“A successful man is one who can lay a firm foundation with the bricks others have thrown at him.”
David Brinkley


ID-10020806As of this writing, treasury and other fixed income rates continue hovering around new all-time lows. This has translated into the lowest home mortgage rates ever seen. Locally we are finding 15-year mortgage options as low as 2.75% and 30-year options have touched 3.25%! Even low and no closing cost refinance options are at record low interest rates and could be beneficial depending upon your mortgage balance, how long you plan to stay in your home, your current maturity date and other factors.

Historically low interest rates are providing other opportunities for us on the wealth planning side as well, such as wealth transfer techniques designed to reduce estate and inheritance taxes. Additionally, for those charitably inclined, certain Charitable Trusts are “supercharged” by the level of IRS-published interest rates (these rates are largely dependent upon broad market interest rates like the 10-year U.S. treasury, thus are also at historical lows).

When developing a healthy balance for your financial future, interest rates play a critical role. Low rates in many ways can represent a significant hurdle to overcome when planning for financial goals. The key, of course, is to find ways to use this environment to lay a firm foundation for your financial future utilizing the many opportunities this creates, such as those strategies mentioned above.

With all the uncertainty and challenges in this world, deep planning for our future is more critical to long-term success than ever. It is simply not enough to work hard, invest as much as you can and hope for the best. With a highly complex world comes opportunities and risks that must be planned for. We will continue to work hard to enhance our client’s financial status by seizing the opportunities presented to us in this ever- changing financial landscape.


profile-picThe past 12 months have been quite volatile. As a result, the financial markets have produced a mixed bag of returns (please refer to index performance chart below). U.S. focused investors have experienced positive stock and bond returns, while globally diversified investors have been hurt by the debt problems of Europe and slower growth rates from the emerging economies of the world. Although our patience can be challenged at times, we continue to believe that it takes global diversification to form a solid foundation for long-term investment portfolios.

Investment in Real Estate

Our investment committee recently decided to invest a portion of client portfolios into the Baron Real Estate Fund. We have been holding about 10% of portfolios in cash reserves for safety of principal and to have liquidity available for future investments. We have been following real estate generally and the Baron Real Estate fund specifically for a couple years and believe that now is an appropriate time to make an allocation to this fund.

Investment Case

We believe that we are in the early stages of a multi-year recovery in real estate, both commercial and residential, fueled by:

  • improved cash flows
  • rising demand
  • a scarcity of new construction & development projects
  • improving credit availability
  • and historically low interest rates

Additionally, many real estate companies have begun to experience improvement driven by higher occupancy rates, increased rents & sales, and lower costs. We also like that real estate serves as an inflation hedge.

Financial Market Indices as of May 31, 2012
May 2012
Last 3 Months
Last 12 Months
S&P 500 Total Return (US stocks) 1.4% -0.8% 11.0% 9.1%
MSCI Developed EAFE (foreign stocks) 1.1% -4.0% 4.6% -11.0%
MSCI Emerging Mkt. Equities (emerging country stocks) 1.6% -7.2% 3.9% -16.3%
Barclays Capital Aggregate Bond – Intermediate Term 0.9% 1.4% 2.9% 5.0%
Barclays Capital Municipal Bond Index 1.6% 2.3% 5.3% 10.5%


The information in this material is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons. While all information prepared in this document is believed to be accurate, any statements of opinion constitute only current opinions of Payne Wealth Partners, Inc., which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. Accordingly, you should not put undue reliance on these statements. The information does not attempt to examine all the facts and circumstances that may be relevant to an individual’s financial needs. Payne Wealth Partners, Inc. is not soliciting any action based on these statements.

Contact Our Offices

Payne Wealth Partners, Inc.
Keystone Financial Consulting
601 N Cross Pointe Blvd
Evansville, IN 47715
Phone: 812-477-6221
Toll Free: 888-477-6221
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