Major Asset Classes | June 2012 | Performance Review

June was a month of revival for most of the major asset classes. The hefty, wide-ranging losses in May gave way to handsome gains last month. Alas, the pop in June wasn’t strong enough to wipe away May’s red ink, but there’s no mistaking the rebound in the month just passed. Whether it’ll roll on in July is anyone’s guess, but for the moment the bulls have something to cheer about.

The big winner among the major asset classes: stock markets in foreign developed markets, in dollar terms. The MSCI EAFE index rose 7.0% last month. REITs, commodities and stocks generally posted respectable gains in June too. The main loser: inflation-indexed Treasuries, which shed 0.6% in June.
Meanwhile, our market-weighted Global Market Index (a passively allocated benchmark of all the major asset classes) posted a strong 2.9% increase in June—its best monthly gain since January. For the first half of 2012, GMI is higher by 4.4% and over the past three years the index has climbed 9.7% on an annualized total return basis. Passive, no-brainer asset allocation, in other words, is (still) earning competitive returns.
The second half of 2012, of course, is wide open for debate. With the euro crisis still bubbling, an oil embargo targeting Iran about to kick in, and the high season of Presidential politics in the U.S. approaching, there are lots of moving parts to digest for looking ahead. Judging by returns at the midway mark for 2012, however, recent history has rewarded buy-and-hold diversification, much to the chagrin of traders, who warned that this form of investing had gone the way of the Edsel.