eMoney uses a rolling 25-year historical period to calculate the rate-of-return for equity indices.
Occasionally, if the new quarter and the dropped quarter have unusual opposing returns, this can result in larger than typical changes.
For example, a quarter with poor returns is added to our historical data, while the quarter dropped from the historical period had a significantly strong performance.
Due to the recent bear market in February and March, the updated Capital Market Assumptions for 3/31/2020, if accepted, will result in:
- Lower rates of return for equity indices.
- Several other indices, such as investment real estate, commodities, and high yield bonds, also have meaningfully lower returns.
- Lower assumed growth rates in your emoney projections.
- Lower Monte Carlo scores and funding ratios, notably for clients more heavily weighted to equities.
- Not all indices saw decreased rates of return. Most bond indices have a slight increase in their rate-of-return.
Note that we do not force market index data updates and choose to make them available at your discretion. While eMoney updates our default rates each quarter, these are your assumptions, and you control whether to accept updates as well as editing any rates to your liking.
For comparison, below are the changes to the rates of return for eMoney’s default model portfolios.
Also for comparison, below are a few indices and their before and after rates of return.
With questions, call us at 888-362-8482 or send us an email.