Global Markets Regain Lost Ground

Global markets recovered lost ground last week, although a measure of broadly defined commodities continued to fall, based on a set of exchange traded funds through Oct. 2.


By James Picerno

The strongest gainer for the major asset classes last week: US real estate investment trusts (REITs). After four straight weekly losses, Vanguard Real Estate (NYSEARCA:VNQ) surged 5.4%. Despite the bounce, the fund remains in a trading range that has prevailed over the last two months.

Foreign property shares were the second-best performer last week, albeit well behind VNQ’s rally. Vanguard Global ex-US Real Estate (VNQI) rose 2.7%, recovering all of the previous week’s loss, and then some.

US stocks also participated in the last week’s bounce. Vanguard Total US Stock Market (VTI) rose 2.1% — the fund’s first weekly gain in five weeks.

US investment-grade bonds managed to eke out a fractional gain, just barely. Vanguard Total US Bond Market (NYSEARCA:BND) ticked up three basis points, although the ETF continues to trade in a tight band.

Retirement Day Trader - eBook

Sign up for our Newsletter & get the FREE eBook
Retirement Day Trader:
How to Sell Weekly Options for Steady Income

  • This field is for validation purposes and should be left unchanged.

Commodities posted the only loss last week for the major asset classes. WisdomTree Continuous Commodity Index Fund (GCC), which equal weights a broad set of commodities, fell for a second straight week with an 0.8% decline.

The Global Markets Index (GMI.F) rebounded. This unmanaged benchmark, which holds all the major asset classes (except cash) in market-value weights via ETFs, rose 1.4% — recovering the previous week’s loss.

US equities continue to lead the major asset classes for the one-year return window—by a wide margin. VTI closed last week with an 18.4% total return.

VTI’s increase is well ahead of the second-best one-year performance via Vanguard FTSE Emerging Markets Shares (NYSEARCA:VWO), which is up 11.6% from its year-earlier close after factoring in distributions.

The worst performer for the one-year window: foreign property shares. VNQI is down 10.2% for the past 12 months.

GMI.F’s one-year performance: 10.7%.

Current drawdowns for the ETF proxies tracking the major asset classes range from a slight 0.5% peak-to-trough decline for inflation-indexed Treasuries (TIPS) to a hefty 46% crash for broadly defined commodities (GCC).

GMI.F’s current drawdown is a 3.6% decline from its previous high.