Emerging Markets Posted Solid Gains Last Week
Equities and fixed-income securities in emerging markets posted solid gains last week, based on a set of exchange-traded funds.
Stocks in this corner of global markets posted the highest weekly gain for the major asset classes through Friday July 27 while bonds in emerging markets (NYSEARCA:EEM) delivered the third-best return.
Vanguard FTSE Emerging Markets (NYSEARCA:VWO) jumped 1.9% — the ETF’s fourth straight weekly gain, lifting the fund close to its highest level in a month. VanEck Vectors JP Morgan Emerging Markets Local Bond (EMLC) also popped, jumping 1.2% last week – the third-biggest increase for the major asset classes.
Bloomberg notes that July’s been a strong month for emerging markets, which had been fading previously. But some money managers focused on the niche say that it’s premature to assume that a sustained rally is now underway.
“We might see another correction between now and October,” advises Zsolt Papp, a client portfolio manager at JPMorgan Chase & Co.’s asset management unit. “If it is stabilization, we’re in early stages of it. There is still a tail risk that volatility will stay high.”
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Meanwhile, US real estate investment trusts (REITs) posted the biggest loss for the major asset classes last week. Vanguard Real Estate (NYSEARCA:VNQ) slumped 0.7% — the ETF’s third weekly decline.
Turning to the one-year trend, US stocks continue to dominate by a wide margin. Vanguard Total Stock Market (VTI) is up a solid 16.3% on a total-return basis – far above the rest of the field. Indeed, the second-best one-year performer – foreign stocks in developed markets — are ahead by a comparatively mild 6.7% via Vanguard FTSE Developed Markets (VEA).
Despite the recent rally in emerging markets, bonds in this corner are posting the biggest one-year decline. EMLC traded down 3.8% on Friday vs. the year-earlier price after factoring in distributions.