Property, Commodities Led Rebound In Global Markets Last Week

Nearly every slice of the major asset classes bounced last week, led by strong gains in real estate shares and commodities, based on a set of ETFs through Friday’s close (Oct. 15). The only decline was in foreign high-yield bonds.

Vanguard US Real Estate (VNQ) surged 3.5%, posting its best weekly advance since mid-September. The rally left the fund to just below its highest close since Sep. 17. It’s unclear if the latest bounce is a temporary pause in what appears to be modest correction after a long-running uptrend. The week ahead may offer insight into whether the sector is set to stabilize.

Foreign property shares are last week’s second-best performer via Vanguard Global ex-U.S. Real Estate Index (VNQI). The ETF’s 3.3% gain is the strongest weekly rise in nearly a year.

Commodities extended their rally for a fourth-straight week. Posting a third-place gain last week, WisdomTree Commodity (GCC) increased 3.2%.

US stocks posted a solid advance last week too, although the 1.9% rise for Vanguard Total US Stock Market (VTI) was middling relative to the rest of the field.

The only setback on our list: VanEck Vectors International High Yield Bond (IHY), which ticked down 0.1%. Although the latest decline was fractional, the loss marked the sixth straight weekly decline, suggesting that a strong downside trend prevails for the fund.

The Global Market Index (GMI.F) — an unmanaged benchmark (maintained by that holds all the major asset classes (except cash) in market-value weights via ETF proxies — rose for a second week, posting a strong 1.7% increase.

For the one-year window, US REITs are in the lead for the major asset classes. VNQ is up a sizzling 35.3% on a total-return basis. US stocks (VTI) and commodities (GCC) aren’t far behind in second and third place, respectively.

The only one-year declines at the moment: US bonds (BND) and foreign government bonds (BWX), each posting a modest loss at Friday’s close vs. the year-earlier level after factoring in distributions.

GMI.F’s one-year performance is a strong 21.0% total return.

Most of the major asset classes continue to post low drawdowns. US junk bonds (JNK) currently enjoy the smallest peak-to-trough decline – a thin -0.4%. The majority of markets are no deeper than -7%. Commodities and emerging-markets government bonds are the main outliers at -25.1% and -14.4%, respectively.

GMI.F’s current drawdown is a mild -1.7% as of last week’s close.

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