The Portsmouth Supplemental Retirement Board convened on November 2, 2023, to discuss key financial updates and market trends impacting the retirement fund. The meeting began with a review of recent performance metrics, highlighting that value stocks outperformed growth stocks, with large-cap stocks surpassing small-cap stocks during the quarter.

The Dow Jones Industrial Average experienced a decline of 2.1%, while the S&P 500 fell by 3.3%. Notably, the Russell 2000 index, which tracks small-cap stocks, saw a significant drop of over 5%. The primary driver of these declines was attributed to rising interest rates, which have been a focal point for financial markets.

The Board noted that the core Personal Consumption Expenditures (PCE) index, a critical inflation measure used by the Federal Reserve, continued its downward trend but remained above the Fed's target of 2%. The Federal Open Market Committee (FOMC) recently opted to maintain the current base interest rate of 5.25%, following a series of rate hikes that began in March 2022.

In terms of bond performance, the Bloomberg US Aggregate Bond Index fell by 3.2% during the quarter, with long-term government bonds experiencing an even steeper decline of 9.4%. This dual bear market in both equities and fixed income presented challenges for investors, as there were limited safe havens.

The meeting also addressed the performance of various stock indices, revealing that while the S&P 500 was down 3.3% for the quarter, it remained up 13.1% year-to-date. The discussion highlighted the disparity in performance between growth and value stocks, with growth stocks suffering more due to the rising interest rates.

Looking ahead, the Board expressed concerns about the potential lag effects of the Fed's interest rate policies on the economy, noting that it could take 12 to 18 months for these changes to fully manifest. The meeting concluded with a focus on the importance of monitoring the quality of earnings and market breadth, particularly in light of the concentration of performance among a small number of large-cap stocks, often referred to as the "magnificent seven."

Overall, the Portsmouth Supplemental Retirement Board's meeting underscored the complexities of the current financial landscape, marked by rising rates, inflation concerns, and the performance of key stock indices, setting the stage for future discussions on investment strategies and portfolio management.