US Real Estate Investment Trusts Posted Biggest Gain Last Week

Real estate investment trusts (REITs) in the US posted the biggest gain by far for the major asset classes last week, based on a set of exchange-traded products. By contrast, last week’s biggest loser: equities in emerging markets.



By James Picerno

Vanguard Real Estate (NYSEARCA:VNQ) topped the winner’s list over the five trading days through Friday, Oct. 19, with a 3.0% gain. The increase marks the first weekly advance for the ETF in more than a month.

Turning to the red ink brigade, Vanguard FTSE Emerging Markets ((NYSEARCA:VWO) continued to fall, slumping 1.6%–the biggest setback among the major asset classes last week. The slide marks the fourth straight weekly loss for VWO, which closed near its lowest price in a year-and-a-half on Friday.

Investors are hoping that the strong rebound in China’s stock market today signals that emerging markets generally will find a degree of stability this week. The Shanghai Composite rallied for a second day on Monday, supported by bullish comments from several Chinese leaders and regulators.

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Meanwhile, an ETF-based version of the Global Markets Index (GMI.F) ticked lower again last week. This investable, unmanaged benchmark that holds all the major asset classes in market-value weights fell for a fourth week, edging down 0.1%.

For one-year return, US equities continue to dominate. Despite recent weakness, Vanguard Total Stock Market (VTI) is up 9.3% on a total-return basis, the strongest year-over-year gain for the major asset classes by far.

Indeed, the rest of the field is mostly under water for the trailing one-year change. The biggest setback as of last week’s close is found in emerging markets stocks: VWO has lost 12.5% over the past year.

GMI.F is still clinging to a slight year-over-year gain: the benchmark up 1.5% on a total-return basis for the trailing one-year performance through Friday.

For current drawdown, broadly defined commodities continue to post the biggest slide from the previous peak. The iPath Bloomberg Commodity (DJP) is nursing a 47% peak-to-trough decline. On the flip side, US junk bonds are posting the smallest drawdown – roughly 2%, based on SPDR Bloomberg Barclays High Yield Bond (NYSEARCA:JNK).

GMI.F’s current drawdown is a bit more than 6% at the moment.