August Was a Risk-On Month

August was another risk-on month.


By James Picerno

Except for investment-grade bonds in the US and foreign-government fixed income in developed markets, across-the-board gains dominated the major asset classes higher last month.

The gains fell short of the full sweep of July’s advances, but there was nothing subtle about last month’s rally. The top performer: US equities via the Russell 3000 Index, which rose a strong 7.2% in August. The rise marks the fifth straight monthly increase and the most since April for this broad measure of American shares. The coronavirus crash in March, as a result, has been fully recovered and beyond in this corner as the Russell 3000 has forged new highs.

The weakest performance in August was in US bonds: Bloomberg US Aggregate Index slipped 0.8% last month, the first setback since March.

Although red ink remains on the year-to-date ledger, most asset classes are now posting gains. The top-performer so far for 2020: inflation-indexed Treasuries: Bloomberg Treasury TIPS Index is up 9.6% on the year. Meanwhile, the deepest loss this year through August is in foreign real estate shares via S&P Global Property Ex-US, which has shed 15.3%.

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The Global Market Index (GMI) continued trending higher. This unmanaged benchmark (maintained by, which holds all the major asset classes (except cash) in market-value weights, rose a solid 4.3% in August – the fifth consecutive monthly gain.

For the trailing one-year window, GMI has rallied 13.0% vs. the year-earlier level. That’s a middling performance relative to US stocks (Russell 3000(NYSEARCA:IWM)) and US bonds (Bloomberg Aggregate Bond), which are up 21.4% and 6.5%, respectively, over the past 12 months through the end of August.