Portfolios advance broadly in the second quarter, building on strong Q1 gains

How our stocks, bonds, and alternatives fared in Q2

Market Review by Terrence Demorest, Chief Investment Officer—Public Markets and ESG

7 July 2023

Global markets showed remarkable resilience in the second quarter, shrugging off multiple concerns and delivering impressive returns across most major asset classes. Despite continued anxieties over the regional banking crisis, the debt ceiling showdown, the Fed’s war on inflation, and the ongoing geopolitical crisis in Ukraine, investors remained optimistic and drove the markets to new heights. For months the U.S. economy has defied predictions of an imminent recession, even as it shows some signs of slowing. Unemployment remains near historical lows, and corporate earnings have solidly beaten market expectations.


Most stock markets across the globe were up in Q2, but without question larger growth companies had the standout performance (especially in the U.S). Technology stocks once again led the way, as companies involved in e-commerce, cloud computing, and artificial intelligence saw their stock prices soar, reflecting the increasing reliance on technology in a post-pandemic world. While the accompanying chart reveals that the U.S. stock market’s year-to-date gains have been very unevenly distributed among stocks of different sizes and styles, this has favored Westmount’s stock portfolios, which are currently overweighted to large cap growth companies. In addition, our overweight to U.S. companies in general explains its outperformance relative to the MSCI All Country World Index, which measures stocks globally (tracking both U.S. and foreign companies). While geopolitical tensions, inflation concerns, and potential regulatory changes may adversely impact the markets in the coming months, long-term investors continue to focus on the strength of the underlying economy. Global stocks finished the second quarter up +6.2%. while Westmount’s stocks were up +7.0%. For the year-to-date (as of June 30), global stocks are up + 13.9%, while Westmount stocks are up +14.2%.


Coming off a dreadful 2022, the bond market has rebounded this year, albeit modestly. The year actually started off quite strong for bonds, as falling inflation rates boosted optimism that the Fed was approaching the end of its campaign of rate hikes to crush high inflation. During the second quarter, though, the bond market faced headwinds as improving economic indicators led investors to fear further hikes by the Fed. As a net result, interest rates fell in the first quarter but climbed back in the second quarter, finishing roughly by June 30 where they started the year.

Westmount’s active positioning of client bond exposures—investing in short-term bonds while taking selective credit exposure—has paid enormous dividends in the past two years, in both challenging and more favorable bond environments. As the chart below shows, this positioning allowed client bond portfolios to weather the violent storm of 2022 extremely well, subjecting them to only 35% of the downside of the bond market. This year, in a more favorable climate for bonds, this positioning has also enabled our clients to capture over 100% of the upside of the market. For the second quarter, the bond market’s return was -0.8%, while Westmount’s bonds were up +0.1%. For the year, the bond market is up +2.1%, as Westmount’s bonds are up +2.4%.


Reflecting the economy’s unexpectedly favorable performance, the alternative assets portfolio continues to deliver solid gains. As discussed in previous editions of Quarter Notes, our alternative portfolio at present consists mostly of private credit exposures, which are real estate and corporate loans that are collateralized by real estate and other tangible assets. They tend to be floating rate in nature (protecting them substantially from interest rate hikes). The outlook for this sector remains positive as some of the biggest competitors to private lenders—regional banks—have become even less active in making loans due to higher regulatory costs and a lower deposit base. This should allow private lenders to make loans with even stronger deal terms and pricing. For the quarter, the alternatives portfolio was up +2.6%, and for the year-to-date is up +4.8%.

Recent posts

Life insurance as an asset class

A win-win for consumers and investors

Planning considerations for young adults

POA, HIPAA, and AHCD – understanding these safeguards for the unexpected


Federal Regulatory Filings
Every year we offer to make available copies of the regulatory disclosure documents that our firm has on file with the U.S. Securities and Exchange Commission. If you would like a copy of our current Form ADV, Part II (at no cost, of course), please call us at 310-556-2502.

Keeping Us Current
The financial advice and recommendations that we provide are tailored to each client’s unique circumstances. Please remember to contact us if there are any material changes in your financial situation or investment objectives, or if you wish to add or modify any restrictions to your investment portfolios.

This report was prepared by Westmount Asset Management, LLC (“Westmount”). Westmount is registered as an investment advisor with the U.S. Securities and Exchange Commission. The information contained in this report was prepared using sources that Westmount believes are reliable, but Westmount does not guarantee its accuracy. The information reflects subjective judgments, assumptions and Westmount’s opinion on the date made and may change without notice. Westmount undertakes no obligation to update this information. It is for information purposes only and should not be used or construed as investment, legal or tax advice, nor as an offer to sell or a solicitation of an offer to buy any security. No part of this report may be copied in any form, by any means, or redistributed, published, circulated or commercially exploited in any manner without Westmount’s prior written consent.

Performance figures shown for the Westmount Alternatives portfolios are derived from the model allocation for that portfolio, as calculated by Bloomberg for the period shown. Client allocations are customized and may have different asset mixes and performance. Each client’s actual performance may differ from the model Westmount performance.

Performance figures shown include the reinvestment of dividends and are net of all investment costs, including Westmount’s advisory fee. Calculation of Westmount’s advisory fee is based on an average annualized fee rate of client portfolios. Westmount’s fees are described in Part 2 of our Form ADV, which is available upon request.

If you have any comments or questions about this article, please contact us at info@westmount.com.