Turmoil from geopolitical tension and economic confusion may be weighing on the global economy, but you wouldn’t know it by looking at returns of late. Indeed, risk became popular again in July, as the chart below illustrates.
Asset class proxies: Vanguard REIT ETF, iShares Russell 2000, iShares MSCI Emerging Markets, MSCI EAFE, S&P 500 SPDR, Vanguard High-Yield Corporate, PIMCO EM Bond, Morningstar Short Gov’t Category, PIMCO Foreign Bond, iShares Lehman Aggregate Bond, Vanguard Inflation Protected Securities Fund, Credit Suisse Commodity Return Strategy Fund.
The top-performing asset class over the past month through last Friday was emerging market equities, based on Morningstar data for iShares MSCI Emerging Markets Index ETF. Not even the perennially strong REITs sector could match emerging markets’ recent comeback after losses in May and June. Of course, REIT investors probably aren’t complaining, having scored the second-best rise for the past month with a 7.4% total return, based on the Vanguard REIT Index ETF. In fact, REITs are still the leader in 2006, with a year-to-date total return of nearly 18%–far and away the best performance this year.
Perhaps more striking is the fact that there’s nary a sign of red ink on our performance tables, save for the tiny loss posted by inflation-indexed Treasuries so far this year, as per Vanguard Inflation-Protected Securities fund. Otherwise, it’s been onward and upward across the board, at least by our somewhat narrow view of performance time frames.