For the week of October 14 - October 18
At last we have a Truce…for now
Being based in our Nation's capital, the government shutdown was a more rigorous emotional roller coaster than anticipated. The good: roads were clear for those of us that have to travel the Capital Beltway each day. The bad: some family, friends, and neighbors were out of work without pay for a short time. And finally, the ugly: our elected officials seemed to have forgotten why they were elected. The fix extends the funding of our government at current levels until January 15, 2014, so let's hope kicking the can down the road a few months will allow our elected officials to negotiate a deal in the best interest of its citizens and remove uncertainty from the capital markets once completed. As investors, the tapering and the uncertainty will continue to stoke the volatility fire, and once there's clarity, good economies, good companies and good sectors of the market will drive capital formation going forward. The current environment has made it difficult to stay true to a core asset allocation strategy, but incorporating alternatives and non-correlating assets remains important as clients want returns and recognize the markets being propped up month after month by the Fed. Below are some highlights on the Stock and Bond markets with some color on the asset flows for ETFs.
The domestic equity market as measured by the S&P 500 was up 2.44% for the week. International markets as measured by the MSCI EAFE outperformed domestic markets for the week, returning 2.77%. Interestingly, the ETFs that garnered the largest asset flows came in domestic Equity ETFs: SPY, QQQ and XLF. Outside of the High Yield asset class, 8 out of the top 10 ETF asset gatherers for the week were in Domestic, International or Emerging Market equity products. Please see our table at the bottom of this commentary for all the specific ETF flows details.
Treasure yields fell for the week across all maturity ranges as bond prices rose. The bond markets were an opposite tale of the tape relative to ETF asset flows and performance. The US Aggregate bond index rose 0.55% on the week, US Corporates were up 0.84%, and Municipal bonds were flat. High Yield was the top performing bond category with returns of 0.91%. Short term fixed income ETFs, BIL and SHY were two of the top ten losers of assets for the week, with two of the gold based ETFs, GLD and IAU also being in the top ten for redemptions.Sources:*Indexes are from Reuters and Yahoo! Finance 4pm closing data*Gold prices are from EcoWin and J.P. Morgan Asset Management*Treasury rates are from Bloomberg.com*Municipal and high yield rates are from Barclays Capital
Past performance is not indicative of future results.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: To the extent that this content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security. AdvisorShares is a sponsor of actively managed exchange-traded funds (ETFs) and holds positions in all of its ETFs. This document should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any products mentioned. Investment in securities carries a high degree of risk which may result in investors losing all of their invested capital. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results. To learn more about the risks with actively managed ETFs visit our website AdvisorShares.com.