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Morningstar Indexes' Fourth-Quarter Commentary

Despite starting the year with barely a pulse, the global economy finished stronger.

Sanjay Arya, 01/15/2010

Markets put in an unexpectedly strong performance during 2009. Despite starting the year with barely a pulse, the global economy finished stronger, showing signs of robustness late in the year. Equity investors were rewarded handsomely, as the Morningstar US Market Index posted a gain of 28%, and the Global ex-US Index notched a 41% hike. Bonds turned in a mixed performance. The Corporate Bond Index posted one of its best years, adding 17% for the year. However, the Government Bond Index turned in a decidedly more muted performance, ending the year with a decline of almost 3%.

In our quarter-end review, Travis Pascavis, Morningstar's director of equity indexes, provides insight into the market's performance.

A recap of the key observations:
* Growth reigns supreme. There was a massive divergence across investment styles. Powered by a rally in technology stocks, growth stocks rocketed 43% for the year, versus a more modest gain of 18% for value stocks.
* Corporate bonds rally, but sovereign risk persists. As corporate balance sheets firmed up, spreads between government and corporate yields narrowed considerably. However, there were heighted concerns about sovereign risk of highly indebted states.
* Economic growth propels commodities. The Morningstar Long-Only Index rose 18% for the year. Bright spots included metals and energy.

To access the report, please click on this link: Morningstar Market Commentary.

Sanjay Arya is director of Morningstar Indexes.

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