Economic and Market Update
April 30, 2014
Fredric T. Walls, II
Managing Director
SunTrust Banks, Inc.
Foundations and Endowments Specialty Practice
(202)879-6689
fredric.walls@suntrust.com
Taylor Howerton
Director
SunTrust Robinson Humphrey
Financial Risk Management
(404)926-5735
taylor.howerton@suntrust.com
Andy Richman, CTFA
Director of Fixed Income
SunTrust Banks, Inc.
Private Wealth Management
(561)972-9333
andy.richman@suntrust.com
Table of Contents
I. Investment Overview
II. Economic Overview
III.Monetary Policy Overview
IV.Investment Outlook
V. Q&A
Summary


Global stocks were slightly higher in March, capping off a choppy first quarter
–
Equities proved resilient in March despite ongoing tensions in Ukraine and soft China economic data. A rebound in payrolls
and manufacturing indicates the US is thawing from the winter chill, while Europe’s recovery continued at a gradual pace.
–
The MSCI ACWI, a proxy for global equities, rose 0.4% in March, finishing a choppy first quarter with a gain of 1.1%. The
S&P 500 gained 0.8% in the month, bringing its year-to-date return to 1.8%; eight of the ten S&P 500 sectors were positive
for the month, with Telecom, Utilities, and Financials gaining over 3%.
–
Emerging markets (EM) equity was the clear leader last month, gaining 3.1%. This rebound helped cut EM’s first quarter
loss to just 0.4%. Conversely, Developed International markets declined 0.6% in March but closed the first quarter up 0.7%.
Bonds were mixed in March, but outperformed stocks in the first quarter
–
Remarks from new Fed Chair Janet Yellen suggested short term interest rates could rise earlier in 2015 than market
expectations led to a slight rise in yields; the benchmark 10-year US Treasury yield ended March at 2.72%, up from 2.65%.
–
The Barclays Aggregate Index declined 0.2% in March, but returned 1.8% in the first quarter. The Barclays High Yield Index
extended its year-to-date outperformance by gaining 0.2% in March, while EM bonds snapped back with a return of 1.3%.
Municipal bonds also continued its 2014 leadership, gaining 0.2% for the month and is now up 3.3% for the year.

REITs and Commodities posted another positive month, as the FTSE NAREIT All Equity Index and DJ-UBS Commodity
Index each gained 0.4%. Both asset classes are up strongly thus far in 2014.

2014 base case outlook remains intact
–
With economic series rebounding, we expect the US growth will rise near 3% over the course of the year. Our 2014 equity
outlook remains unchanged; we anticipate positive but moderate returns with greater volatility. This view is predicated on an
improving economic and earnings outlook as we progress through the year. Within fixed income markets, we continue to
favor a slightly short maturity portfolio and taking credit risks over interest rate risks.
2
Economic Overview
3
Sluggish Recovery in World’s Largest Economies
2013 GDP
GDP 2014E
GDP 2015E
Unemployment Rate
2014E
United States
1.9%
2.7%
3.0%
6.4%
China
7.7%
7.4%
7.2%
4.1%
Japan
1.5%
1.4%
1.2%
3.8%
Germany
0.4%
1.8%
2.0%
6.7%
France
0.2%
0.9%
1.3%
10.8%
UK
2.7%
2.7%
2.5%
6.8%
Brazil
2.2%
1.9%
2.3%
5.7%
(1.9%)
0.5%
1.0%
12.7%
Russia
1.3%
1.1%
2.1%
5.7%
India
4.5%
4.7%
5.3%
4.8%
Canada
2.0%
2.3%
2.5%
2.8%
World
2.1%
2.7%
3.0%
7.6%
Country
Italy
The US holds 4.5% of the world’s population and produces 22% of global GDP
4
Source: Bloomberg, IMF, Consensus Estimates
US Economic Indicators have Lagged by Most Measures…
Industrial Production
Total Workers Employed
109
106
Average
Recovery
105
101
102
97
100
93
98
89
96
85
94
81
-18
-9
0
9
18
27
36
Average
Recovery
104
45
92
54
9M jobs lost
651K to go
-18
-9
Retail Sales
127
122
117
112
107
102
97
92
87
-9
0
9
18
27
9
18
27
36
45
54
45
54
Real Personal Income
109
107
105
103
101
99
97
95
93
91
Average
Recovery
-18
0
36
45
54
Average
Recovery
-18
-9
0
9
18
27
36
Source: Strategas Research Partners. Data through February 2014. Charts begin at cycle peak of Dec 2007 where indexed to 100. Average recovery ends after approx. 20 mos.
5
US Economic Indicators by Comparable Recessions
US GDP Growth Three Years Into Recovery

30%
Since the Great Depression, ten recessions have been
followed by a recovery that lasted at least three years
25%

20%
The recovery that started June 2009 was the weakest coming
out of a recession as shown in the graphs to the left:
15%
(1) GDP growth never been weaker
10%
6.8%
(2) Unemployment rate never remained so high
5%

0%
1948-49 1953-54 1960-61 1969-70 1973-75 1981-82 1990-91
2001
2007-09
Recession Cycles
US Unemployment Rate Three Years Into Recovery
10.0%
8.2%
8.0%
6.0%
4.0%
2.0%
0.0%
1948-49 1953-54 1960-61 1969-70 1973-75 1981-82 1990-91
2001
2007-09
Recession Cycles
6
Source: Bloomberg, US Department of Labor
History suggests recessions caused by financial crisis lead to
much slower recoveries
But We Expect Growth to Pick Up in 2014
US Annual Real Economic Growth (%)
>3%
2.8%
2.8%
2.5%
1.9%
2.5%
2.1%
2.0%
2011
2012
STI
EST
-0.2%
-2.8%
2005
2006
2007
2008
2009
2010
Source: STI Econ
7
2013
2014
Recently Improved US Macro Backdrop
Metric
Description
Case-Shiller Home Price Index
2.0%
MoM% Change
1.5%
1.0%
0.5%
0.0%
-0.5%

Home prices up 8% YOY

Housing starts up 11% YOY

Residential investment growing > 20% and contributing
-1.0%
~0.5% to GDP
-1.5%
Housing
-2.0%
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Consumer Sentiment
Consumer
Consumer Sentiment
90
85
80
75
70

US consumer ~70% of GDP

Consumer sentiment recently reached a five year high

Profound impact on sentiment due to rising equity prices

US manufacturing growth has outpaced other advanced
65
60
55
50
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
US Manufacturing Jobs
Manufacturing
US Manufacturing Jobs
50%
economies, adding over 500,000 jobs in the past three years
0%

-50%
-100%
a repatriation of jobs as technological innovation and
-150%
-200%
Mar-09
Rising costs of labor abroad and shipping to the US has led to
specialized skills lead to efficiencies in production
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Natural Gas Production

The EIA estimates the US will become a net exporter of natural
U.S. Natural Gas Production (Trillions of cubic feet per year)
30
gas by 2016
EIA Forecast
25
20

Shale Gas
petroleum gases (LPG) for the first time
15
Other
10
Energy
Recently, the United States became a net exporter of liquefied

US carbon emission hit a 20 year low as producers converted
5
0
1990
from coal to less expensive natural gas
1995
2000
2005
2010
2015
2020
8
Source: Bloomberg, Haver Analytics, US Census Bureau, PIMCO, National Association of Realtors, EIA
Economic Overview
Some, but not all, economic data no longer impacted by the winter weather distortions
rebounded for February, as
new durable goods orders
surged 2.2% and industrial
production increased 0.6%.
The trend of housing data,
however, remains somewhat
unknown as the most recent
housing data still included the
impacted weather timeframe
and showed monthly
declines.
US Auto Sales (SAAR)
Though March 2014
18.00
16.00
Units in millions
Depending on the industry,
most US economic data is
beginning to reverse the
larger-than-normal impact
from the harsh winter season.
Auto sales jumped to 16.3
million units (SAAR), up 6.9%
in March, after weaker results
during December and
January. Retail and food sales
rose 0.3% in February,
snapping a two-month slump.
Manufacturing gauges also
14.00
12.00
10.00
8.00
6.00
2008
2009
2010
Data source: Bloomberg
9
2011
2012
2013
2014
Economic Overview, continued
Recent jobs data appears back on prior trend, helping US private payrolls finally exceed pre-recession high
As expected, job growth
Total US Private Payrolls
Through March 2014
accelerated once the wicked
winter weather passed.
120
along with revisions of
37,000 more than previously
115
reported for January and
February. That took the sixmonth average to 188,000,
roughly in-line with the prior
trend. The composition of
the March gains illustrate
that the industries that
suffered the worst weatherrelated declines, such as
construction and retail,
accelerated in March (or in
February and March). This
has helped US private
payrolls finally exceed prerecession high.
In millions
Nonfarm payrolls increased
by 192,000 jobs in March,
110
105
100
95
90
1994
1998
2002
Data source: FactSet
10
2006
2010
2014
Monetary Policy Overview
11
12
The Fed’s Dual Mandate
Core Inflation Metrics
Unemployment (U-3) & Underemployed (U-6): Since 1994
4%
18%
14%
Annual % Rate
Annual % Rate
16%
12%
10%
8%
6%
3%
2%
1%
4%
2%
Apr-96
Apr-02
Unemployment Rate
Apr-08
0%
Feb-96
Apr-14
Feb-02
Core CPI
Underemployment Rate
Feb-08
Feb-14
Core PCE
Labor Force Participation Rate

The unemployment rate has fallen to 6.7% from a peak of 10%.
68%
Large part of the drop is due to falling participation rate
67%
Annual % Rate

Core inflation metrics, the second part of the Fed’s dual mandate,
remain dormant

Yet, given the expansion of the Fed’s balance sheet, price
66%
65%
64%
63%
stability may become a greater challenge in the future
62%
Mar-96
Mar-02
Participation Rate
Source: Bloomberg
13
Mar-08
Average: 66.0%
Mar-14
Economists’ Interest Rate Outlook (Bloomberg Survey – March 2014)
3M LIBOR – Past & Projected
 The charts on the right show the Bloomberg consensus forecast for 3Month LIBOR (48 economists) and the 10-Year Treasury (76 economists)
1.00%
5.00%
0.90%
0.80%
4.00%
0.70%
through the fourth quarter of 2014
 With a few exceptions, there is a general sense within the
economic community that short-term rates will remain low for an
0.60%
3.00%
0.50%
extended period. This view is consistent with recent comments by
0.40%
2.00%
the Fed
0.30%
0.20%
1.00%
0.10%
0.00%
0.00%
Q412
12
Q4
Q213
13
Q413
13
Q214
14
Q414
14
Q2
Q4
Q2
Q4
Economist Averages
Economist Predictions
Economist Averages
10Y Treasury – Past & Projected
Economic Expectations
Current
Q1 14
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
10Y UST
2.78%
2.84%
3.00%
3.16%
3.34%
3.46%
3.59%
2Y UST
0.43%
0.39%
0.49%
0.63%
0.80%
0.94%
1.13%
3M LIBOR
0.24%
0.27%
0.31%
0.35%
0.41%
0.47%
0.63%
Fed Funds
0.25%
0.25%
0.25%
0.25%
0.25%
0.25%
0.38%
Real GDP
2.40%
1.90%
2.80%
3.00%
3.05%
3.00%
CPI
1.60%
1.40%
1.70%
1.80%
1.90%
1.95%
Unem ploym ent
Rate
6.70%
6.60%
6.50%
6.40%
6.20%
6.10%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Q4 12
Based on Bloomberg Economist Survey (3/13/2014)
14
Source: Bloomberg, Indicative only – Not a recommendation or offer to deal
Q2 13
Q4 13
Economist Averages
Q2 14
Q4 14
Economist Predictions
Market Response to QE
GDP is expanding (slowly), yet US treasury rates are still near record lows
10-yr Treasury Yield vs. GDP (annualized)
QE1
Op. Twist &
QE 3/4
QE2
6.0%
10.0%
8.0%
5.0%
6.0%
4.0%
4.0%
2.0%
3.0%
2.0%

Even in the depth of the recession, the
10-year Treasury yield was above 2%.
Over the past 12 months, the 10-year
0.0%
yield reached new record lows following
-2.0%
QE despite an expanding economy
-4.0%
-6.0%
1.0%
-8.0%
0.0%
Apr-04
Apr-06
Apr-08
US GDP (rt. Axis)
Apr-10
Apr-12
-10.0%
Apr-14
10-yr UST
Treasury rates are lower now than at any point during the great recession
Source: Bloomberg
15
Market Response to QE
10-Year Treasury Yield vs. S&P 500
QE1
Op. Twist &
QE 3/4
QE2
6.0%

1900
Since the announcement on March
5.5%
18, 2009 of the first round of
Quantitative Easing (ending March
2010), the S&P has gained over
1700
5.0%
1500
4.5%
4.0%
100%
1300
3.5%

The announcement came in
3.0%
December that the Fed would begin
2.5%
reducing their quantitative easing
program by $10bln per month
1100
900
2.0%
700
1.5%
1.0%
Apr-04
Apr-06
Apr-08
10-yr UST
Apr-10
Apr-12
S&P 500 (rt. Axis)
The typical relationship between treasuries and stocks has decoupled since the Fed began QE programs
Source: Bloomberg
16
500
Apr-14
Interest Rate Volatility – 10 Year Treasury Yield
Interest rate markets dominated by the Euro-zone, FOMC, and negotiations in Washington
Yield reaches 3% for
first time since July
2011
Yellen more
hawkish than
expected at
press
conference
2.90%
Fed begins
QE taper
Possible QE
slowdown
2.70%
Fed refrains from
QE taper
2.50%
Positive April
employment
report
2.30%
2.10%
Russia/Ukraine
situation
escalates
Congress passes bill
to avoid many of the
“Fiscal Cliff” tax
increases
1.90%
1.70%
Fed announces
QE4: $45BN of
Treasury
purchases
monthly
1.50%
1.30%
Oct-12 Nov-12 Dec-12 Jan-13
Source: Bloomberg
Better than
expected
February
payrolls
Feb-13 Mar-13
Apr-13 May-13 Jun-13
Jul-13
17
Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14
Feb-14 Mar-14
Apr-14
Historical 10 Year Treasury – Last 30 Years
Despite recent move higher, interest rates are still near historic lows
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
1964
1969
1974
1979
10 Year Treasury
1984
1989
Avg (6.66%)
1994
1999
2004
2009
2014
Avg Since '90 4.98%
History suggests long-term rates may increase rapidly once the Fed begins signaling an increase in short-term rates, and/or if the
market begins to price in the risks associated with current monetary policy and the unprecedented US debt burden
Source: Bloomberg
18
Investment Outlook
19
March 2014 Market Returns
Total Return*
Periods ending March 31, 2014
1 Month
YTD
0.4%
-0.1%
1.1%
2.5%
16.6%
2.4%
US Equities
Large-Cap US Stocks (S&P 500)
Small-Cap US Stocks (Russell 2000)
0.8%
-0.7%
1.8%
1.1%
21.9%
24.9%
International Equities
Developed Countries (MSCI EAFE) (net)
Emerging Markets (MSCI EM) (net)
-0.6%
3.1%
0.7%
-0.4%
17.6%
-1.4%
US Fixed Income
US Treasury Bonds (Benchmark 10 Yr.)
Barclays Aggregate Bond Index
BofAML High Yield Master
Barclays Municipal Bond Index
-0.3%
-0.2%
0.2%
0.2%
3.4%
1.8%
3.0%
3.3%
-4.4%
-0.1%
7.5%
0.4%
0.0%
1.3%
3.0%
3.5%
4.5%
-1.1%
Non-Traditional
REITs (FTSE NAREIT Equity Index)
Commodities (Dow Jones UBS)
The MSCI ACWI, a proxy for global equities, rose
0.4% in March, finishing a choppy first quarter
with a gain of 1.1%. Emerging markets equity was
the clear leader last month, gaining 3.1%, while
Developed international was down 0.6%

Remarks from new Fed Chair Janet Yellen
suggested short term interest rates could rise
earlier in 2015 than market expectations led to a
slight rise in yields; the benchmark 10-year US
Treasury yield ended March at 2.72%, up from
2.65% the previous month.

The Barclays Aggregate Index declined 0.2% in
March, but returned 1.8% in the first quarter. The
12 Months
Global Markets (in US $)
MSCI AC World Equity Index (net)
Citi World BIG USD un-hedged
International Bonds
Citi World BIG non-USD un-hedged
JPM Emerging Mkts Bond Index

Barclays High Yield Index and the Barclays
Municipal Bond Index each rose 0.2% last month,
extending their year-to-date outperformance. EM
bonds also snapped back with a monthly return of
1.3%.

0.4%
0.4%
8.5%
7.0%
3.3%
-2.1%
* All returns in US dollars Data Source: Factset
20
REITs and Commodities had another positive
month and are up strongly thus far in 2014.
Market Overview
Global stocks rose modestly in March, capping off an uneven first quarter in which bonds outperformed
MTD
YTD
8%
7.0%
6%
4%
3.1%
3.3%
3.0%
2.5%
1.8%
2%
0.8%
1.8%
1.1%
0.7%
0.2%
-0.7%
-0.6%
0.4%
0.2%
0%
-0.1%
-0.4% -0.2%
Commodity
World Bond
Muni Bonds
HY Bond
Agg Bond
Emerging Mkts
-2%
Developed Int'l
0.8% in March, bringing its
year-to-date gain to 1.8%. The
MSCI Emerging Markets Index
raced up 3.1% for the month,
but remained the biggest
laggard for the year.
Through March 2014
Small Cap
and across markets. The
MSCI ACWI gained 0.4% for
the month and 1.1% for the
quarter. The S&P 500 rose
Major Market Returns
S&P 500
After the best year for global
equities since 2003 and the
worst annual performance for
the Barclays US Aggregate
Bond Index since 1994, a
reversion in trends took hold
as bonds outperformed
stocks in the first quarter.
World equities generally
rallied during March and in
the first quarter, but returns
were uneven. There was a
great deal of rotation within
Returns are represented by the follow indices: Barclays Municipal Bond Index, Citi World BIG Index, Barclays
Aggregate Bond Index, Barclays US Corporate High Yield Index, Barclays Bellwether 10 and 30 year US Treasury
Index, Barclays Financial Institutions Bond Index, Barclays MBS Fixed Rate Bond Index and Barclays US Investment
Grade Corporate Index. Data source: Morningstar and Barclays Live
21
Equity Market Overview
Global stocks were slightly higher in March, capping off a choppy first quarter
The MSCI ACWI, a proxy for
global equities, rose 0.4% in
March, finishing a choppy first
quarter with a gain of 1.1%.
The S&P 500 gained 0.8% in
the month, bringing its year-todate return to 1.8%; eight of
the ten S&P 500 sectors were
positive for the month, with
Telecom, Utilities, and
Financials gaining over 3%.
US & International Equity Market Returns
Through March 2014
1.1%
0.8%
US (S&P 500)
1.8%
-0.6%
Developed Int'l USD (EAFE)
0.7%
-0.5%
-0.3%
Developed Int'l Local (EAFE)
Emerging markets (EM) was
the clear leader last month,
Emrg Int'l USD (MSCI EM)
gaining 3.1%. This rebound
helped cut EM’s first quarter
loss to just 0.4%. Conversely,
Developed international was
Emrg Int'l Local (MSCI EM)
down 0.6% in March but closed
the first quarter up 0.7%.
0.4%
Global (MSCI ACWI)
3.1%
-0.4%
1.9%
-0.5%
MTD
YTD
Returns are represented by the following indices: S&P 500 Stock Index, MSCI Emerging Market Index in US
dollars and local currencies, MSCI EAFE developed country index in US dollars and local currencies. Data source:
Morningstar
22
Equity Market Overview, continued
Modest headline index gains masked significant rotation below the surface
Despite relatively flat
headline index performance,
a tremendous amount of
rotation within and across
markets occurred in the
quarter. Many of the more
expensive, high growth
areas, such as internet and
biotechnology stocks, sold
off late in the March, as
investors re-priced the
amount they were willing to
pay for future growth
expectations. Japan, 2013’s
star performer, has
struggled this year, while
peripheral European markets
Italy and Ireland jumped
14.6% and 14.0%,
respectively.
Select First Quarter Country
Stock Market Performance
Italy
14.6%
Ireland
14.0%
India
8.2%
USA
1.7%
Germany
-0.3%
Japan
-5.6%
China
-5.9%
Russia
-24.0%
-14.5%
-14.0%
-4.0%
6.0%
Data source: Factset, country returns based on MSCI indices; data shown in USD on a net basis
23
16.0%
Taxable Bond Market Overview

Fixed Income Market Sector Returns
Through March 2014
MTD
YTD
10%
8.1%
8%
6%
2.5%
2%
-0.2%
Agg Bond
-0.1%
Mortg Backed
Muni Bonds
Corporate
High Yield
-0.3%
-2%
0.9%
0.2%
0.1%
World Bond
0%
1.8%
1.6%
0.2%
month. As a result, the yield curve flattened during the first
quarter. The Barclays Aggregate Index declined 0.2% in
March, but returned 1.8% in the first quarter. Meanwhile, the
Barclays High Yield Index rose 0.2%, extending its year-todate outperformance. EM bonds also snapped back with a
monthly return of 1.3%.
3.4%
3.3%
2.9%
-0.3%
US Tsy 30 Yr
3.0%
US Tsy 10 Yr
4%
Returns are represented by the following indices: Barclays Municipal Bond Index, Citi World
BIG Index, Barclays Aggregate Bond Index, Barclays US Corporate High Yield Index,
Barclays Bellwether 10 and 30 year US Treasury Index, Barclays Financial Institutions Bond
Index, Barclays MBS Fixed Rate Bond Index and Barclays US Investment Grade Corporate
Index.

3/31/2014
Spurred by low rates and strong investor demand,
companies continued to borrow in record amounts during
the first quarter. With rising demand, spreads on corporate
Treasury Yield Curve Comparison
5.00%
Remarks from Fed Chair Yellen suggested short term
interest rates could rise earlier than market expectations led
to a slight rise in yields; the benchmark 10-year US
Treasury yield ended March at 2.72%, up from 2.65% last
bonds closed the quarter at their lowest levels since July
2007. The average spread on investment grade bonds was
106 basis points at the end of March. Still, we find value in
corporate bonds from the incremental yield they offer over
12/31/2013
4.00%
3.00%
Treasuries and recommend
overweight position.
2.00%
1.00%

0.00%
123
5
7
10
15
20
Maturity (years)
25
30
investors
maintain
an
With spreads are at seven-year lows and some of the recent
issuance driven by equity-friendly motives on the part of
corporations, we believe security selection and active
management of positions is critical.
Data source: Bloomberg
24
Commodity Market Overview
Surge in agriculture help commodities notch fourth straight monthly gain
Gains in agricultural
commodities offset a selloff in
precious and industrial metals
as the DJ-UBS Commodity
Index gained 0.4% in March,
bringing its year-to-date gain
to 7.0%.
Wheat prices surged over 15%
while corn and grains jumped
over 8% in March, aided by
extreme weather conditions.
Metals prices were generally
lower. Copper fell over 5% on
China growth concerns. The
DJ-UBS Gold Index fell 2.9% in
March and Silver declined
7.0%.
Energy markets were mixed;
natural gas gave back some of
its previous gains.
Commodity Index and Sector Returns
Through March 2014
MTD
YTD
20%
16.5%
15%
10%
7.0%
5.4%
5%
4.2%
5.0%
0.4%
0%
-1.8%
-1.6%
-5%
-4.6%
-4.0%
-10%
Industrial
Metals
Precious Metals
Energy
Agriculture
DJ-UBS
Commodity
Index
Returns are represented by the follow indices: DJ-UBS Commodity Index and the following Sector Sub-Indexes of the
DJ UBS Commodity Index: Industrial Metals, Precious Metals, Energy and Agriculture. Data source: Morningstar.
25
Alternatives Investment Overview
Hedge funds stumble in March, but post solid first quarter results
Choppy equity markets
hampered hedge fund returns
during March as the HFRI
Fund Weighted Composite
Index slipped 0.3%. Similarly,
most of the major equityrelated strategies were
negative for the month.
Conversely, fixed incomebased approaches
outperformed as the HFRI
Relative Value Index rose 0.6%
in March and were the best
performing strategy during the
first quarter, up 2.4%. Other
narrowly-focus fixed income
approaches also did well in
March. Hedge funds, however,
largely kept pace for the first
quarter as the HFRI Fund
Weighted Composite Index
gained 1.1% compared to 1.8%
for the S&P 500 Index.
Comparative HFRI Hedge Fund Returns
Through March 2014
MTD
YTD
-0.3%
Fund Weighted Composite
1.1%
-0.2%
Equity Hedge
Macro: Systematic Diversified
1.4%
-1.9%
-1.8%
0.6%
Relative Value
2.4%
-0.9%
Fund of Funds Diversified
0.1%
-0.2%
Barclays Aggregate Bond
1.8%
0.8%
S&P 500
1.8%
-2.0%
0.0%
2.0%
4.0%
Data Source: Hedge Fund Research, Factset
Hedge fund investing involves substantial risks and may not be suitable for all clients. Hedge funds are intended for sophisticated
investors who can bear the economic risks involved. Hedge funds may engage in leveraging and speculative investment practices
that may increase the risk of investment loss, can be illiquid, and are not required to provide periodic pricing or valuation
information to investors. Hedge funds may involve complex tax structures, have delays in distributing tax information, are not
subject to the same regulatory requirements as mutual funds and often charge higher fees.
26
Strategy Summary April 2014
These positions represent SunTrust’s outlook regarding the attractiveness of asset classes and strategies versus our benchmark over a tactical
time horizon in a balanced portfolio. Our opinions are informed by the assessment of global economic variables, financial stress indicators,
valuation metrics and technical analysis under a broad range of potential risk and return scenarios.
Category
Underweight  Neutral  Overweight

PORTFOLIO RISK

EQUITY
Valuations at rich levels and expectations for rising rates to increase borrowing costs.

Improving economies, but these markets remain vulnerable and structural issues remain.
 Improving growth and credit environment is especially positive for smaller-cap companies.
Non-US Dev. Mkts. Small Cap

Emerging Markets
While economically important and favorably priced, these markets still face headwinds.
 Should be a near-term beneficiary of a moderately improving economy and labor market.
Real Estate Securities

Though valuations are fair, commodity supply dynamics are not favorable.

US Government
Particularly vulnerable to a rise in rates; TIPS continue to provide some relative value.

US Mortgage-Backed Securities
Tend to outperform government bonds when rates rise and have a slightly higher yield.

US Investment Grade Corporate
US Preferred Securities

US Convertible

Within credit, investment-grade bonds have lower yields and a longer duration profile.
High risk profile and sensitivity to interest rates increase chance for negative returns.
Opportunity relative to US equity and credit is not compelling.

Municipal
Attractive on an after-tax basis, but underweight due to potential for rising rates.
 Better yield, lower duration and current environment supports low default expectations.
US High Yield
 Provides duration management and return opportunity should rates rise.
US Leveraged Loans

Yields likely to remain lower than US as economic trends/monetary policy lag.
 Attractive yields and diversification opportunity, but volatility may persist near term.
Emerging Markets
NON-TRADITIONAL
Alternative Strategies
Real Assets
With a better economy and a transition in Fed policy, rates should move higher; we
continue to underweight the more interest-rate sensitive bond market sectors.

FIXED INCOME
Non-US Developed Markets
Earnings growth potential, improved lending conditions and increased M&A activity.

Non-US Developed Markets
Natural Resources
US leads recovery; reasonable valuations, strong balance sheets, and diverse revenue.

US Small & Mid Cap
Master Limited Partnerships
Stocks are reasonably valued and offer dividend yields competitive with bond yields.

US Large Cap
Investment Rationale
Improving economy and record corporate profitability vs. a maturing economic cycle, fair
equity valuations, still fragile European recovery and emerging market risks.


Allocations to hedge funds should smooth returns and expand the opportunity set as stock
market returns moderate and a move up in interest rates pressures fixed income.

Offers differentiated sources of return and lower risk profile vs. equity. Hedged equity
should benefit from falling intra-stock correlations.
Current data do not support adding inflation protection to portfolios. Commodities expected
to be pressured by a stronger dollar, slower growth in China and improving supply.
Allocations based on a balanced portfolio. Neutral = within 10% of benchmark weight; Over/Underweight = over 11% deviation from benchmark weight. Opportunistic allocations are out-of-benchmark and
are made within a range of 0-20%. Benchmark = 50% MSCI All Country World Index, 50% Barclays Aggregate Bond Index.
 = No Allocation;  = Current Allocation;  = Opportunistic Allocation
27
What Next?
Reasons for Concern
Reasons for Optimism
 Improving economic backdrop
 Structural employment problems
 Housing market recovery
 Global monetary policy can distort
markets and create unintended
 Wealth impact from increasing home
consequences
and equity prices
 Aging demographic trends
 Rapid technological innovation
 Large fiscal deficit
 Stabilizing European debt crisis
28
Q&A
29
Important Disclosures
The information and material presented in this commentary are for general information only and do not specifically address individual investment objectives, financial situations or the
particular needs of any specific person who may receive this commentary. Investing in any security or investment strategies discussed herein may not be suitable for you, and you may
want to consult a financial advisor. Nothing in this material constitutes individual investment, legal or tax advice. Investments involve risk and an investor may incur either profits or
losses. Past performance should not be taken as an indication or guarantee of future performance.
Services provided by the following affiliates of SunTrust Banks, Inc. : Banking and trust products and services, including investment advisory products and services, are provided by
SunTrust Bank. Securities, insurance (including annuities) and other investment products and services are offered by SunTrust Investment Services, Inc., an SEC registered brokerdealer and a member of the FINRA and SIPC, and a licensed insurance agency. Investment advisory products and services are offered by SunTrust Investment Services, Inc.,
RidgeWorth Capital Management, Inc., and GenSpring Family Offices, LLC, investment advisers registered with the SEC.
SunTrust Bank and its affiliates and the directors, officers, employees and agents of SunTrust Bank and its affiliates (collectively, "SunTrust") are not permitted to give legal or tax
advice. Clients of SunTrust should consult with their legal and tax advisors prior to entering into any financial transaction.
If included as a part of the presentation, any Baseline Financial Services, Inc. (Baseline), or Crandall, Pierce & Company (Crandall Pierce), or First Rate (First Rate) statistical data is
provided as a service of SunTrust Banks, Inc. and its affiliates (including SunTrust Investment Services, Inc.) by Baseline, Crandall Pierce or First Rate, all of which are unaffiliated third
party vendors. While this information is believed to be accurate, SunTrust Banks, Inc., including its affiliates, does not guarantee the accuracy, completeness or timeliness of, or
otherwise endorse these analyses or market data.
Investment and Insurance Products:
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The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but SunTrust Investment Services, Inc. (STIS) makes no
representation or guarantee as to their timeliness, accuracy or completeness or for their fitness for any particular purpose. The information contained herein does not purport to be a
complete analysis of any security, company, or industry involved. This material is not to be construed as an offer to sell or a solicitation of an offer to buy any security.
Opinions and information expressed herein are subject to change without notice. STIS and/or its affiliates may have issued materials that are inconsistent with or may reach different
conclusions than those represented in this commentary, and all opinions and information are believed to be reflective of judgments and opinions as of the date that material was
originally published. STIS is under no obligation to ensure that other materials are brought to the attention of any recipient of this commentary.
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STIS’s officers, employees, agents and/or affiliates may have positions in securities, options, rights, or warrants mentioned or discussed in this material.
30
Important Disclosures
Asset Allocation does not assure a profit or protect against loss in declining financial
markets.
Emerging Markets: Investing in the securities of such companies and countries
involves certain considerations not usually associated with investing in developed
countries, including unstable political and economic conditions, adverse geopolitical
developments, price volatility, lack of liquidity, and fluctuations in currency exchange
rates.
Fixed Income Securities are subject to interest rate risk, credit risk, prepayment risk,
market risk, and reinvestment risk. Fixed Income Securities, if held to maturity, may
provide a fixed rate of return and a fixed principal value. Fixed Income Securities
prices fluctuate and when redeemed, may be worth more or less than their original
cost.
Hedge funds may involve a high degree of risk, often engage in leveraging and other
speculative investment practices that may increase the risk of investment loss, can
be highly illiquid, are not required to provide periodic pricing or valuation information
to investors, may involve complex tax structures and delays in distributing important
tax information, are not subject to the same regulatory requirements as mutual funds
often charge high fees which may offset any trading profits, and in many cases the
underlying investments are not transparent and are known only to the investment
manager.
International investing entails greater risk, as well as greater potential rewards
compared to U.S. investing. These risks include potential economic uncertainties of
foreign countries as well as the risk of currency fluctuations. These risks are
magnified in emerging market countries, since these countries may have relatively
unstable governments and less established markets and economies.
Investing in smaller companies involves greater risks not associated with investing in
more established companies, such as business risk, significant stock price
fluctuations, and illiquidity.
uncomfortable with this level of risk should not trade managed futures or
commodities.
Real Estate Investments are subject to special risks, including interest rate and
property value fluctuations, as well as risks related to general economic conditions.
Because of their narrow focus, sector investments tend to be more volatile than
investments that diversify across many sectors and companies.
High Yield Fixed Income Investments, also known as junk bonds, are considered
speculative, involve greater risk of default and tend to be more volatile than
investment grade fixed income securities.
31
Index Definitions
It is not possible to invest directly in an index
Barclays Aggregate Bond Index: The broadest measure of the taxable U.S. bond market,
including most Treasury, agency, corporate, mortgage-backed, asset-backed, and
international dollar-denominated issues, all with investment-grade ratings (rated Baa3 or
above by Moody’s) and maturities of one year or more.
Barclays US Corporate High Yield includes USD-denominated, non-investment grade, fixedrate, taxable corporate bond market. Securities are classified as high-yield if the middle rating
of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.
Barclays Corporate Bond Index includes fixed rate corporate bonds with a maturity of at least
one year rated investment-grade (Baa3/BBB-/BBB-) or higher using the middle rating of
Moody’s, S&P, Fitch after dropping the highest and lowest available ratings.
Barclays US Government Index is representative of fixed income obligations issued by the
U.S. Treasury, government agencies, and quasi-federal corporations
Barclays 10-Year U.S. Treasury Bellwethers Index is a universe of Treasury bonds, and used
as a benchmark against the market for long-term maturity fixed-income securities. The index
assumes reinvestment of all distributions and interest payments.
Barclays 1-15 Year Municipal Index is an unmanaged index of investment grade tax-exempt
municipal bonds with maturities of one - 15 years
The J.P Morgan Emerging Markets Bond Index Plus (EMBI+) tracks total returns for traded
external debt instruments (external meaning foreign currency denominated fixed income) in
the emerging markets. The regular EMBI index covers U.S.dollar-denominated Brady bonds,
loans and Eurobonds. The EMBI+ expands upon J.P.Morgan's original Emerging Markets
Bond Index (EMBI), which was introduced in 1992 and covered only Brady bonds. An external
debt version, the EMBI+ is the JPMorgan EMBI Global. JPMorgan EMBI Global Index is an
unmanaged index that tracks debt securities of emerging markets
FTSE NAREIT Equity REIT Index is an unmanaged index reflecting performance of the U.S.
real estate investment trust market
BofAML US Treasury 3-Month Bill is represented by the a subset of The Bank of America
Merrill Lynch 0-1 Year US Treasury Index including all securities with a remaining term to final
maturity less than 3 months.
US intermediate term government bonds index is derived from Morningstar’s database and
tends to have a similar duration of three to five year treasuries
32
Credit Suisse Leverage Loans is a representative index of tradable, senior secured,
U.S. dollar denominated non-investment-grade loans
DJ Dividend Select Index is an index that selects stocks by dividend yield, dividend per
share growth, dividend payout ratio, and average trading volume and weighted by
indicated annual dividend.
The S&P GSCI® Gold Index provides investors with a reliable and publicly available
benchmark tracking the COMEX gold future
S&P 500 Index is comprised of 500 widely-held securities considered to be
representative of the stock market in general.
MSCI EAFE Index comprises 21 MSCI developed country indices outside of North
America: Europe, Australasia and the Far East.
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that
is designed to measure equity market performance of emerging markets. As of May 27,
2010 the index consisted of the following 21 emerging market country indices: Brazil,
Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea,
Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan,
Thailand, and Turkey.
Source: MSCI. The MSCI information may only be used for your internal use, may not
be reproduced or redisseminated in any form and may not be used as a basis for or a
component of any financial instruments or products or indices. None of the MSCI
information is intended to constitute investment advice or a recommendation to make
(or refrain from making) any kind of investment decision and may not be relied on as
such. Historical data and analysis should not be taken as an indication or guarantee of
any future performance analysis, forecast or prediction. The MSCI information is
provided on an “as is” basis and the user of this information assumes the entire risk of
any use made of this information. MSCI, each of its affiliates and each other person
involved in or related to compiling, computing or creating any MSCI information
(collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without
limitation, any warranties of originality, accuracy, completeness, timeliness, noninfringement, merchantability and fitness for a particular purpose) with respect to this
information. Without limiting any of the foregoing, in no event shall any MSCI Party
have any liability for any direct, indirect, special, incidental, punitive, consequential
(including, without limitation, lost profits) or any other damages. MSCI All-Country
World ex-US Index: is a free float-adjusted market capitalization weighted index that is
designed to measure the equity market performance of developed and emerging
markets, ex-US equities.