US Real Estate Investment Trusts Topped Market Gains Last Week

US real estate investment trusts (REITs) rallied last week, posting the strongest gain for the major asset classes, based on a set of exchange-traded funds. US REITs also continue to lead global markets with the highest one-year return as well.

Vanguard Real Estate (VNQ) jumped 1.7% last week (through Nov. 15). The gain was by far the strongest increase for the major asset classes. VNQ had been sliding previously, after reaching a record high in late-October. The rebound that unfolded in last week’s trading has real estate’s bulls wondering anew if the ETF is laying the groundwork to reach a new record high in the weeks ahead.

Last week’s biggest loser: emerging markets stocks. Vanguard FTSE Emerging Markets (VWO) tumbled 1.3%. In a round of profit taking, the crowd pulled back in what had been a high-flying ETF of late. Indeed, VWO’s decline marks the fund’s first weekly setback in nearly two months.

The overall trend in global markets, however, remained positive last week. An ETF-based version of the Global Market Index (GMI.F) — an unmanaged benchmark that holds all the major asset classes (except cash) in market-value weights — rose 0.6%. The rise marks the sixth straight weekly advance for the index.

Meantime, US REITs continue to lead the major asset classes for the one-year trend (252 trading days). VNQ closed last week with 19.4% total return vs. the year-earlier level. US stocks are a close second with a 17.0% total return via Vanguard Total Stock Market (VTI).

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Commodities (broadly defined) are still the only negative print for the major asset classes on a trailing one-year basis. The iShares S&P GSCI Commodity-Indexed Trust (GSG) is down 3.0% over the past year.

By contrast, GMI.F continues to post a strong 13.6% total return for the trailing one-year window.

Reviewing all the ETFs listed above through a momentum lens continues to reflect a strong upside bias overall. The analysis is based on two sets of moving averages. The first compares the 10-day moving average with its 100-day counterpart — a proxy for short-term trending behavior (red line in chart below). A second set of moving averages (50 and 200 days) represent the intermediate measure of the trend (blue line). At last week’s close, markets remained in a strong bullish posture in nearly every corner of the major asset classes.

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