The ETF Portfolio Strategist: Trading Week Just Ended Feb. 1-5 2021

In this issue:

  • Global markets rebound
  • Strong week for portfolio-strategy benchmarks

  • Risk-on pays off for one of our managed-risk strategies

brown lion on grass field during daytime

Return to form in February: The late-January correction turned out to be another head fake for risk assets, which rebounded sharply this week. Equities across the board were higher, led by a strong gain in Africa stocks, which topped our set of fund proxies that collectively represent the world’s major asset classes. (For details on all the risk metrics in the table below, along with profiles of the strategies and benchmarks discussed, see this summary.)

VanEck Vectors Africa (AFK) surged 6.5% this week through Friday’s close (Feb. 5), regaining nearly all its losses in the previous week. The fund is still below its last high, set in early-2018, but the recent upside momentum suggests that the old peak may soon give way.

Equities overall had a good week, with robust rallies countering the previous week’s red ink. US small caps rallied 5.5%, lifting the fund to a new record high, based on iShares Core S&P Small-Cap (IJR).

US shares overall rallied every day this week, based on Vanguard Total US Stock Market (VTI). The week’s gain was enough to push the ETF to a new record close.

This week’s losers for the major asset classes, based on our set of proxy funds, were limited to US and foreign developed-market bonds. The biggest setback was logged by SPDR Barclays International Treasury Bond (BWX). The fund, which tracks government bonds in developed markets ex-US, tumbled 1.0% this week – BWX’s fifth straight weekly loss.

Strategy Benchmarks Bounce Back: With most markets returning to a risk-on profile this week, our strategy benchmarks revived once more. Global Beta 16 (G.B16) delivered a strong 3.6% rebound this week, pushing our main strategy benchmark that holds all the funds in the table above to a 3.8% year-to-date gain. (Note that table below is ranked by 5-year returns.)

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Disclosure: None.

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