All The Major Asset Classes Posted Gains Last Week

It was hard to lose money last week as global markets rose across the board for the trading through April 16, based on a set of exchange traded funds. Led by foreign and US real estate shares, all the major asset classes advanced over the previous week’s closing prices.

Property shares ex-US led the party via Vanguard Global ex-U.S. Real Estate (VNQI), which rose a hefty 2.6% – the fund’s best weekly increase since November. At the close of trading on Friday, the ETF was on the cusp of recovering all its 2020 pandemic losses.

A close second-place winner last week: US real estate investment trusts. Vanguard US Real Estate (VNQ) jumped 2.5%, lifting the ETF to a new record high.

The weakest performer last week: junk bonds. In the US and foreign markets, high-yield fixed income securities were the lagging performers. SPDR Bloomberg Barclays US High Yield Bond (JNK) and VanEck Vectors International High Yield Bond (IHY) each rose 0.1% in the week just passed.

By some accounts, a cautious outlook is warranted for high-yield bonds in the wake of a dwindling spread for these securities relative to Treasuries. The current yield premium is a relatively light 3%-plus, according to ICE BofA US High Yield Index Option-Adjusted Spread — near the lowest level in 14 years.

Nonetheless, some analysts argue that high yield bonds remain attractive, partly due to low default rates. “Default rates have fallen a lot and companies have refinanced their debt at lower rates and if we get the expected rebound in profits, high yield can hold up into next year,” predicts Adrian Miller, chief market strategist at Concise Capital, a small-company-debt specialist. 

Last week’s rally in everything kept the Global Markets Index (GMI.F) on a bullish track. This unmanaged benchmark, which holds all the major asset classes (except cash) in market-value weights via ETF proxies, rose 1.2% — the fourth straight weekly advance for GMI.F, which is maintained by CapitalSpectator.com.

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Disclosures: None.

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