Assessing the 2023 LATINA Style 50 Report
By Karen Vergara, CPA AllGen Financial Advisors, Inc
While a few years removed from the pandemic, the negative financial effects still poured over into 2022. Higher inflation, employee and blockchain supply shortages were some of the factors contributing to the downturn in the market.
Additionally, while many seek safety in volatile markets by reallocating to bonds, the bond market also experienced its worst annual loss in history as evidenced by the aggregate bond index losing more than 13%.
These conditions led to many of the companies that we are familiar with, downsizing their workforce more than 20% as their stock prices took a plunge, especially companies within the technology sector.
Retrospectively, considering all of the above factors, it is not a surprise that 2022 proved to be a challenging year for the stock market.
Since 2001, AllGen Financial Advisors (www.allgenfinancial.com), a Registered Investment Advisory Firm, has been comparing the returns of companies in the LS50 to the stock market by using the S&P 500 index and the results for this year are in.
In 2022, the S&P 500 had an average annual return of -19.64%, while the companies in the LS50 had an average -5.83%, a difference of 13.81%.
For the more than 20 years since this report has been commissioned, the LS50 has outperformed by offering a total average annual return of 10.04%, while the S&P 500 has returned 8.55%, a positive difference of 1.49% during the period.
To put these numbers into context, a hypothetical investment of $100,000 in the LS50 in the beginning of 2001 would have resulted in a final account balance of $587,135 while an equivalent investment in the S&P500 would have resulted in a final account balance of $429,559 at the end of 2022. That represents approximately an additional $157,576 for an investor choosing to invest in the LS50 index versus the S&P500.
Despite the challenges posed by the economy and the market in the past few years, it is encouraging to see that the companies that comprise the LS50 continue to outperform the overall market.
While diversity in the marketplace has proven beneficial to corporate culture, the LS50 continues to point to the possible financial benefits generated by the companies that support the Latina workforce
Disclaimer: *This analysis is based on available data at the time of analysis. Some company performances have been omitted as they no longer exist or were not publicly traded. This analysis and returns are also based on a yearly rebalancing of the portfolio to take into account the different companies that are chosen as part of the index each year and an equal weighting of each company. In addition, the measured performance and conclusions derived therein reflect a retrospective look at market performance as the study is conducted after the companies have been selected. It is never prudent to invest based on historical stock performance alone. In addition, the LS50 index is not a real market index but rather a dynamic collection of companies as chosen yearly by LATINA Style magazine. The rates of return and performance illustrated do not reflect any costs associated with investing in either index. As such, the above article should not be construed, nor is it written to provide financial advice as individual situations may vary and past performance is not indicative of future results. Any decision to invest in equity markets should be consulted with a financial professional.
Karen Vergara, CPA AllGen Financial Advisors, Inc.
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