US REITs Led Major Asset Classes For Second Straight Week

Property shares in the US were last week’s top performer for the major asset classes for a second straight week, based on trading through Friday’s close (June 11).

Vanguard Real Estate (VNQ) popped 2.5% last week. The rally marks the fund’s fourth weekly advance.

By some accounts, the allure of REITs is rising as inflation worries heat up. Michael McClary, chief investment officer at Valmark Financial Group, for example, recommends holding REITs as part of an asset mix for hedging inflation risk.  

Foreign property shares were the second-best performer last week. Vanguard Global ex-U.S. Real Estate (VNQI) rallied 1.5%. Here, too, the gain is the fourth weekly advance in a row.

The only losers: bonds (EMLC) and stocks (VWO) in emerging markets, which fell 0.5% and 0.6%, respectively, last week.

An ETF-based version of the Global Market Index (GMI.F) rose 0.5% last week. This unmanaged benchmark holds all the major asset classes (except cash) in market-value weights via ETF proxies.

For the trailing one-year window, US stocks are again leading the major asset classes. Vanguard Total US Stock Market (VTI) is up 48.9%.

The weakest performer: US bonds via Vanguard Total US Bond Market (BND), which remains essentially flat over the past year, even after factoring in distributions.

GMI.F is up 32.6% for the trailing one-year window.

Monitoring funds through a drawdown lens continues to show that more than half of the ETF proxies for the major asset classes closed last week with zero or near-zero peak-to-trough declines.

Meanwhile, the deepest drawdown is still found in broadly defined commodities via WisdomTree Continuous Commodity Index Fund (GCC). The ETF is down 28.1% from its previous high.

GMI.F’s current drawdown is currently zero after the index closed at another record high on Friday.

Learn To Use R For Portfolio Analysis
Quantitative Investment Portfolio Analytics In R:
An Introduction To R For Modeling Portfolio Risk and Return

By James Picerno