Tactical ETF Review: 8.22.2011

Risk is out, safety is in. That’s the message in market action this month, as you’ll see in the following review of ETF proxies for the major asset classes. Bond prices are generally up (and yields are down) while selling dominates trading in stocks, REITs and commodities. The week ahead may bring more churning as the crowd digests the scheduled economic updates: new home sales (Tuesday), durable goods orders (Wednesday), jobless claims (Thursday), and revisions to Q2 GDP and the Reuters/University of Michigan’s consumer sentiment index (Friday). Fed chairman Ben Bernanke also speaks on Friday at the annual Jackson Hole conference. With the recent wave of selling still thick in the air, combined with questions about the economy’s strength, the stakes are high. Will the Fed head outline a new round of monetary stimulus? “If the Fed really is going to go down the route of another round of unconventional policy making, I think they’ve got to go in for, what I called, shock and awe,” Russell Jones, Global Head of Fixed Income Strategy at Westpac Institutional Bank, tells CNBC. Meantime, here’s how the shock and awe in the major asset classes stacks up.


US STOCKS • Vanguard Total Market (VTI) • Benchmark: MSCI US Broad Market Index
A late-summer slump with ominous tones…
VTI_Aug2011.png

FOREIGN DEVELOPED MARKET STOCKS • Vanguard Europe Pacific (VEA) • Benchmark: MSCI EAFE
The trend looks rather dark in foreign equity markets as well…
VEA_Aug2011.png

EMERGING MARKET STOCKS • Vanguard Emerging Markets (VWO) • Benchmark: MSCI Emerging Market
Ditto for emerging-market stocks…
VWO_Aug2011.png

US BONDS • Vanguard Total Bond Market (BND) • Benchmark: Barclays US Aggregate
Bonds, by contrast, are a different story…
BND_Aug2011.png

INFLATION-INDEXED US TREASURIES • iShares Barclays TIPS Bond (TIP) • Benchmark: Barclays US TIPS
Inflation-indexed Treasuries aren’t hurting either …
TIP_Aug2011.png

HIGH YIELD BONDS • SPDR Barclays High Yield Bond (JNK) • Benchmark: Barclays High Yield Very Liquid
Junk bonds, however, are suffering along with stocks…
JNK_Aug2011.png

COMMODITIES • iPath Dow Jones-UBS Commodity (DJP) • Benchmark: DJ-UBS Commodity
And broad measures of commodities continue to trend lower…
DJP_Aug2011.png

REAL ESTATE INVESTMENT TRUSTS • Vanguard REIT (VNQ) • Benchmark: MSCI US REIT
REITs aren’t immune from the recent flight from risky assets …
VNQ_Aug2011.png

FOREIGN DEVELOPED MARKET GOVERNMENT BONDS • SPDR Barclays Int’l Treasury (BWX)
Benchmark: Barclays Global Treasury ex-US Capped

But looking to foreign government bonds as a safe harbor, combined with a lower dollar, has been a winning idea recently…
BWX_Aug2011.png

EMERGING MARKET GOVERNMENT BONDS • Van Eck Market Vectors Emg Mkt Local Currency Bond (EMLC)
Benchmark: J.P. Morgan GBI-EMG Core

The safe-harbor concept looks rather tepid at the moment as it applies to emerging-market debt…
EMLC_Aug2011.png

FOREIGN GOVERNMENT INFLATION-LINKED BONDS • SPDR DB International Inflation-Protected Bond (WIP) •
Benchmark: DB Global Government ex-US Inflation-Linked Bond Capped

Foreign inflation-indexed government bonds, on the other hand, are hot once more…
WIP_Aug2011.png

FOREIGN CORPORATE BONDS • PowerShares International Corporate Bond (PICB)
Benchmark: S&P International Corporate Bond

And foreign corporate bonds are starting to perk up again too…
PICB_Aug2011.png

Charts courtesy of StockCharts.com