The S&P 500 has risen in five out of the past six weeks due to factors such as better-than-expected corporate earnings in the second quarter, improving conditions in the labor market and investor optimism that the Federal Reserve Board (and other central banks around the world) will maintain monetary policies that help support further economic growth.

Last week, for example, minutes from the Fed’s latest meeting were released that suggested Fed officials see little risk of a sharp rise in inflation. As a result, many investors believe that the Fed may not raise short-term interest rates in the near term and that overall interest rates may remain low for an extended period of time.

Globally, emerging markets stocks continued to build on their recent rally. Shares of companies in emerging markets were bolstered in part by rising prices for commodities, which make up a large percentage of many emerging markets’ economies. A weakening dollar also helped boost emerging markets, as it has become cheaper to pay off dollar-denominated business and sovereign debt.

GAIN: Active Asset Allocation

International equity markets enjoyed another strong week. Most of the outperformance came from emerging markets, which benefited largely from rising oil prices driven by speculation of a possible OPEC production output freeze and by lower-than-expected oil inventories. We remain overweight in emerging markets, and may consider adding to our position if the asset class continues to perform well.

Meanwhile, U.S. equity markets were relatively calm during what was another low-volume August week. Value stocks outperformed growth shares slightly, boosted by better-than-expected earnings from the consumer staples sector and by rising commodity prices.

In the fixed-income market, U.S. Treasury bonds were essentially flat as “dovish” minutes from the Fed’s latest meeting allayed investors’ fears of a surprise interest rate hike in September. Corporate bonds continued to offer relatively attractive yields and prospects, and we continue to emphasize our exposure to corporate over Treasuries.

PROTECT: Risk Assist

From a volatility perspective, global stocks continued to maintain the calm they have demonstrated throughout August. That said, certain options positions that have helped keep volatility low expired this past Friday (8/19). With this lid on volatility now lifted, it is possible that the markets will start to experience more typical levels of volatility going forward.

SPEND: Real Spend

After spiking post-Brexit, global volatility quickly subsided and now hovers around 6.6%—approximately one-third its one-year average over the long term. This calm environment has helped to benefit stock markets, which in turn has provided a tailwind for Real Spend portfolios that maintain relatively large equity weightings versus more traditional retirement income portfolios that tend to overweight bonds. For example, typical target date funds for investors entering retirement generally have about 75% of the equity exposure as a moderate Real Spend portfolio. In particular, Real Spend portfolios with global exposure have benefited from strong quarter-to-date performance by international stock markets.