Almost All of the Major Asset Classes Lost Ground Last Week

US investment-grade bonds were the exception, courtesy of a flat performance. Otherwise, the rest of the major asset classes fell last week during a wave of selling, based on a set of exchange-traded products.


By James Picerno

The outlier: Vanguard Total Bond Market (BND), which was essentially flat by the close of trading for the week through Nov. 23. The ETF, which holds a broad set of government and corporate fixed-income securities, has been in a tight trading range since early October.
US stocks posted last week’s biggest setback for the major asset classes. Vanguard Total Stock Market (VTI) tumbled 3.5%, marking the fund’s second straight weekly loss.

Investors are looking for some relief in today’s session. US equity futures are up sharply in early trading today, offering a sign that prices may rebound following the worst Thanksgiving trading week since 2011.

“I don’t think the bull run is over but I think we’re close to the end of the cycle,” said Mark Esposito, CEO of Esposito Securities, on Friday. “It feels a bit unsafe,” he commented, citing softer earnings growth, higher market volatility and a downshift in economic output.

Last week’s downside bias weighed on an ETF-based version of the Global Markets Index (GMI.F). This investable, unmanaged benchmark that holds all the major asset classes in market-value weights tumbled 2.1% — the second straight weekly decline for the index.

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Turning to the one-year return, only US stocks are posting a gain at the moment. Vanguard Total Stock Market (VTI) closed on Friday with a modest 2.8% total return for the trailing 12-month period – the only positive comparison for the major asset classes for this time horizon.

The rest of the field is under water for one-year changes. The biggest loss is in emerging market stocks. Vanguard FTSE Emerging Markets (NYSEARCA:VWO) has shed 13.6% over the past year.

GMI.F was also in the red at last week’s close vs. the year-earlier level via a 2.3% loss.

For drawdown, US investment-grade bonds enjoy the distinction of posting the smallest peak-to-trough slide for the major asset classes at the end of trading last week. Vanguard Total Bond Market (BND) is currently 2.5% below its previous peak.

Broadly defined commodities are still posting the steepest slide from the previous peak. The drawdown for the iPath Bloomberg Commodity (NYSEARCA:DJP) is nearly -50%.
GMI.F’s current drawdown is a relatively moderate -8.8% at the moment.