Major Asset Trends: U.S. Stocks and REITs Strong, International Bonds Worth Considering

by: MyPlanIQ

U.S. stock market has been persistently in a steady up trend: last week, U.S. total stock market index (VTI, SPY) finally notched up to the first place in our trend ranking among major asset classes. For the week, VTI was up 1.15%. Gold (NYSEARCA:GLD) was up most, followed by emerging market and developed stock market indices (VWO, EFA). All were up more than 2%. For more performance details, please refer to here.

The following table shows the trend scores for major assets. The top three assets are U.S. stocks (NYSEARCA:VTI), U.S. Equity REITs (NYSEARCA:VNQ) and commodities (NYSEARCA:DBC). Fixed income bond ETFs are still ranked at the bottom.

Assets Class Symbols 02/18
US Stocks VTI 14.82% 14.32% ^
US Equity REITs VNQ 14.34% 15.18% v
Commodities DBC 13.62% 13.58% ^
International REITs RWX 11.76% 9.27% ^
International Developed Stks EFA 10.71% 9.16% ^
Gold GLD 8.93% 6.85% ^
Emerging Market Stks VWO 7.87% 5.43% ^
US High Yield Bonds JNK 5.5% 5.93% v
International Treasury Bonds BWX 2.86% 0.67% ^
Frontier Market Stks FRN 2.41% 2.49% v
US Credit Bonds CFT 0.38% 0.28% ^
Treasury Bills SHV 0.01% 0.03% v
Emerging Mkt Bonds PCY -0.07% -0.87% ^
Total US Bonds BND -0.49% -0.98% ^
Municipal Bonds MUB -1.17% 0.24% v
Intermediate Treasuries IEF -1.33% -2.13% ^
Mortgage Back Bonds MBB -1.51% -2.27% ^

The trend score is defined as the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).

It has been a difficult period for fixed income investors: the total U.S. bond index (BND, AGG) had a negative trend score, ranking below cash or Treasury Bills (NYSEARCA:SHV), though it still registered a 2.18% total return in the past 52 weeks. We have pointed out that to achieve better returns, one should branch out to consider international bonds such as BWX or emerging market bonds (NYSEARCA:PCY). With U.S. dollar index (NYSEARCA:UUP) is again in a downtrend and its weak fundamental, one should consider to include international bonds such as BWX. Last week, BWX was ranked just below U.S. high yield bonds (NYSEARCA:JNK), placed in the second place among fixed income bond ETFs in the above table. Investors considering to have exposure to international bonds should look at a tactical asset allocation strategy that includes a diversified array of bond index funds. Please refer to this portfolio.

Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

Disclosure: Author is long DBC and IYR.