|
Commodities Lead All Investment Categories
Ron DeLegge, Editor
September 6, 2011
Stocks may have gotten trounced in August, but one month’s performance certainly doesn’t sum up the entire year. A broader look at the asset class universe gives us a clearer picture of the financial markets.
On a year-to-date basis, 2011’s performance has been led by higher prices in commodities, precious metals and bonds.
Commodities Bull Run
Through the first nine months of the year, the precious metals group (NYSEArca: GLTR), which includes gold, silver, platinum, and palladium, are the single best performing asset class. Gold (NYSEArca: IAU) has soared more than 32%, driven by an exodus from stocks (NYSEArca: SCHB), especially European stocks (NYSEArca: VGK).
Despite worries about slowing economic demand for produced goods, commodities (NYSEArca: GCC) have gained 6.49% since the beginning of the year. GCC follows the Continuous Commodity Total Return Index (CCI-TR), which is an equal weight basket of 17 different commodities.
Bonds Up, Stocks Down
Concern about mounting government deficits and debt has not stopped investors and traders from piling into U.S. bonds.
The total U.S. bond market (NYSEArca: AGG), which encompasses domestic investment grade corporate (NYSEArca: LQD) and government debt, has climbed 6.09%, despite falling yields. AGG’s annual yield is around 3.30%.
Long-term U.S. Treasury (NYSEArca: TLT) prices have been particularly strong and pushed higher on speculation the Federal Reserve will alter its $1.65 trillion U.S. government bond portfolio by purchasing additional longer-dated debt.
The theory of decoupling equity markets that don’t mimic each other has been a popularly promoted hypothesis over the past few years, but has not played out in 2011. Emerging market stocks (NYSEArca: VWO), international stocks (NYSEArca: EFA), and U.S. stocks (NYSEArca: SCHB) are down 6% to 11% in value and have mostly moved in unison. The weakest U.S. industry sector has been financial stocks (NYSEArca: XLF) while defensive segments like consumer staples (NYSEArca: XLP) and utilities (NYSEArca: XLU) have added gains.
Conclusion
The more things change, the more they stay the same. That’s been 2011’s story, which is turning out to look very similar to 2008 in terms of market performance.
ETFguide’s Profit Strategy ETF Newsletter gives an unobstructed and rational view of the investment landscape along with actionable ETF strategies for cashing in.
Major Investment Categories: 2011 Year-to-Date (YTD) Performance (thru 9/2/11 market close)
|
Asset Class
|
ETF Ticker Symbol
|
YTD Performance
|
|
Commodities
|
GCC
|
+6.49%
|
|
Emerging Market Stocks
|
VWO
|
-11.12%
|
|
Developed Market Intl Stocks
|
EFA
|
-9.39%
|
|
Precious Metals
|
GLTR
|
+30.84%
|
|
Global Real Estate
|
RWO
|
-1.36%
|
|
High Yield Bonds
|
JNK
|
+0.86%
|
|
U.S. Treasuries 7-10 Yr
|
IEF
|
+13.39%
|
|
Total U.S. Stock Market
|
SCHB
|
-5.99%
|
|
Total U.S. Bond Market
|
AGG
|
+6.09%
|
|
