Major Asset Classes | May 2018 | Performance Review

Real estate investment trusts (REITs) in the US continued to rebound in May, posting the strongest gain for the major asset classes last month.

The MSCI REIT Index increased 3.9%, marking the third straight monthly gain. For the year to date, however, REITs are still underwater, shedding 3.1% so far in 2018 through last month’s close.

In contrast with positive returns for US assets, foreign markets fell in May (in unhedged US dollar terms). Foreign high-yield bonds in developed markets suffered the biggest decline for the major asset classes last month. The Markit Global Ex-US High Yield Index tumbled 4.6% in May – the second straight month of red ink for the index and its biggest monthly slide in more than three years.

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Meanwhile, US stocks continued to bounce back after a sharp correction earlier in the year. The Russell 3000 Index popped 2.8% in May, the strongest monthly increase for the index since January.

US bonds also advanced last month. The Bloomberg-Barclays Aggregate Bond Index edged up 0.7% in May, nearly reversing the loss in the previous month.

The Global Market Index (GMI), an unmanaged benchmark that holds all the major asset classes in market-value weights, posted its second consecutive monthly gain in May. The benchmark edged up 0.4% last month. For the trailing one-year period, GMI is ahead by a solid 8.9%. By comparison, US equities (Russell 3000) are enjoying a substantially stronger 15.1% over the past year while a broad measure of US investment-grade bonds (Bloomberg-Barclays Aggregate) is off 0.4% for the latest 12-month period.