April was a foolproof month for investing. All the major asset classes posted handsome gains last month, leaving no room for excuses for active strategies that stumbled.
Leading the charge higher: foreign stocks in developed markets in U.S. dollar terms. The MSCI EAFE Index’s total return was a strong 6% last month, its best monthly performance this year and twice the 3% pop for U.S. stocks (Russell 3000) in April. A fair amount of the gain in foreign equities, however, was due to the dollar’s decline. The U.S. Dollar Index tumbled 3.9% last month, its steepest descent in a calendar month in nearly a year.
Whatever the fallout from the greenback’s dive, it wasn’t obvious in broadly defined asset classes last month. Risk paid off in nearly every corner of the capital and commodity markets in broadly defined terms in April. The last time everything popped was last October.
Unsurprisingly, our passively weighted benchmark of all the major asset classes earned a strong 3.5% last month—its best showing since December’s 4.8% gain. For the year so far, the Global Market Index (GMI) is up 7% on a total return basis. The trend is even stronger over the past 12 months, with GMI climbing by nearly 16%, thanks to the fact that double-digit gains dominate the performance summary for individual asset classes for year through April 31.
In other words, betas are giving actively managed asset allocation strategies a competitive run once more.