Nearly all the major asset classes posted solid gains in the kickoff to the new year based on a set of proxy ETFs. The lone exception was commodities.
Stocks in emerging markets led the way higher for the trading week through Friday’s close (Jan. 6). Vanguard Emerging Markets Stock Index Fund (VWO) surged 5.2%, rising to its highest close since August.
Aneeka Gupta at Wisdomtree UK Ltd. in London said,
“Valuations [in emerging markets] have been depressed for a long time and they were due for a correction but the real catalyst for the outperformance was the dollar weakening and China coming back online,”
The rest of the major asset classes' main buckets rose last week–except for commodities. WisdomTree Continuous Commodity Index Fund (NYSE:GCC), which holds a broad set of commodities, traded down 3.1%, falling to the low end of its narrow trading range of recent months.
The Global Market Index (GMI.F), an unmanaged benchmark maintained by CapitalSpectator.com, rebounded 2.1% in the opening week of 2023 – the first weekly gain in the past five. This index holds all the major asset classes (except cash) in market-value weights via ETFs and represents a competitive measure for multi-asset-class portfolio strategies.
Despite last week’s broad-based rallies, most major asset classes continue to suffer losses for the one-year trailing window. The exception: commodities via GCC, which closed up 3.4% on Friday vs. its year-ago price.
GMI.F’s one-year performance is negative, posting a 15.0% slide.
Comparing the major asset classes through a drawdown lens shows relatively steep declines from previous peaks for most markets worldwide. The softest drawdown at the end of last week: US junk bonds (JNK) with a 10.0% slide from its last peak.
GMI.F’s drawdown: -16% (green line in the chart below).
