The shortened trading week due to the Labor Day holiday saw light data and low trading volumes.
Despite some positive data, U.S. stocks trended lower for much of the week, amid signs that the economy was starting to cook once again. Weekly initial jobless claims fell and came in at 216,000 for the week ending September 2, one of the lowest readings since the pandemic and showed that businesses were still hiring at a fevered pace. The ISM Services PMI unexpectedly surged to 54.5 in August, marking the strongest growth in the services sector in over six months. August’s reading reversed the dip seen in July and also came in higher than the forecasted number of around 52.5. This sent stocks lower due to fears the Fed would keep its pace of interest rate hikes going for the foreseeable future. However, on a bright note, the announcement of an IPO for British chip-maker ARM, with a valuation of $52 billion, kept tech stocks higher on the week.
Heading into next week, investors will once again be treated to the latest inflation data. The monthly Consumer Price Index (CPI) reading has been heading lower, holding steady at 0.2% for July. This matched expectations and drove the annual pace of price increases to 3.2% in July. For August, analysts expect the reading to come in around 3.4% when it is released on Wednesday. The question now is more to do with the Federal Reserve and what it will do with monetary policy going forward. On Thursday, the August producer price index (PPI) reading is expected to come in marginally higher with a 1.3% annual increase in August, compared to 0.8% increase seen in July. On the consumer side, the month-over-month retail sales figure is expected to rise by just 0.4% in August, after last month’s unexpected 0.7% jump. Lastly, on Friday the preliminary reading of the University of Michigan’s consumer sentiment for September is expected to head back down to 70. Despite the expected dip, the elevated level of this metric continues to indicate that consumers still feel relatively good about their prospects.
Given this economic backdrop, let us see how this impacts the performance of various investment strategies.
Investment Strategy Scorecard
Overall, the U.S. stock markets were down for the rolling month.
Several cannabis ETFs surged over the last trailing month on legalization hopes. At the same time, strategies focused on Indian equities, Japanese equities and growth themes also performed well. However, several small-cap and strategies focused on China struggled.
U.S Equity Strategies
Overall, strategies focused on growth continue to outperform their value counterparts among key U.S. equity strategies.
- Spyglass Growth Fund (SPYGX) , up 6.29%
- Virtus KAR Mid-Cap Growth Fund (PSKCX), up 2.62%
- Invesco Dynamic Large Cap Growth ETF (PWB) , up 1.5%
- Schwab U.S. Large-Cap Growth ETF™ (SCHG), up 0.62%
- iShares S&P Small-Cap 600 Value ETF (IJS) , down -6.5%
- SPDR® S&P 600 Small Cap Value ETF (SLYV), down -6.55%
- Vulcan Value Partners Small Cap Fund (VVISX) , down -8.9%
- Lazard US Equity Concentrated Portfolio (LEVOX), down -13.6%
Majority of the dividend strategies failed to post gains over the last trailing month. However, high yielding strategies continue to perform better than strategies focused on small-cap and other growth-focused companies.
- Lord Abbett Dividend Growth Fund (LAMYX) , down -0.27%
- Goldman Sachs U.S. Equity Dividend and Premium Fund (GIDWX), down -0.4%
- iShares Core High Dividend ETF (HDV) , down -0.47%
- SPDR® S&P International Dividend ETF (DWX), down -0.81%
- Delaware Ivy Mid Cap Income Opportunities Fund (IVOYX) , down -4.84%
- Invesco S&P Ultra Dividend Revenue ETF (RDIV), down -5.24%
- ProShares Russell 2000 Dividend Growers ETF (SMDV) , down -6.01%
- Hartford Dividend and Growth HLS Fund (HIADX), down -9.86%
U.S. Fixed Income Strategies
In US fixed income, several floating rate strategies managed to post marginal gains while long-duration strategies continued to struggle.
- ProShares Short 20+ Year Treasury (TBF) , up 3.16%
- Franklin Floating Rate Daily Access Fund (FCFRX), up 0.92%
- Fidelity Advisor® Floating Rate High Income Fund (FIQSX) , up 0.76%
- iShares Interest Rate Hedged Long-Term Corporate Bond ETF (IGBH), up 0.72%
- PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund (LTPZ) , down -2.76%
- iShares 20+ Year Treasury Bond ETF (TLT), down -2.77%
- Vanguard Extended Duration Treasury Index Fund (VEDIX) , down -3.46%
- PIMCO StocksPLUS® Long Duration Fund (PSLDX), down -4.86%
Foreign Equity Strategies
Indian and Japanese strategies outperformed other foreign equity strategies, while Chinese strategies struggled.
- WisdomTree India Earnings Fund (EPI) , up 4.06%
- Matthews Japan Fund (MJFOX), up 1.92%
- iShares MSCI India ETF (INDA) , up 1.41%
- PGIM Jennison Emerging Markets Equity Opportunities Fund (PDEZX), up 1.28%
- TIAA-CREF Emerging Markets Equity Fund (TEMRX) , down -5.33%
- Baillie Gifford International Growth Fund (BGEUX), down -6.81%
- Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) , down -7.28%
- WisdomTree China ex-State-Owned Enterprises Fund (CXSE), down -7.63%
Foreign Fixed Income Strategies
None of the key foreign fixed income strategies managed to post gains over the trailing one month.
- DFA World ex U.S. Government Fixed Income Portfolio (DWFIX) , down -0.48%
- VanEck Emerging Markets High Yield Bond ETF (HYEM), down -0.55%
- Stone Harbor Emerging Markets Debt Fund (SHMDX) , down -0.86%
- iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB), down -1.79%
- VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC) , down -3.1%
- T. Rowe Price International Bond Fund (PAIBX), down -3.17%
- Eaton Vance Emerging Markets Local Income Fund (EEIIX) , down -3.37%
- iShares International Treasury Bond ETF (IGOV), down -3.38%
Among alternatives, cannabis and managed futures focused strategies performed better than volatility, contrarian, and gold strategies.
- ETFMG Alternative Harvest ETF (MJ) , up 17.79%
- WisdomTree Japan Hedged Equity Fund (DXJ), up 5.29%
- Catalyst/Millburn Hedge Strategy Fund (MBXAX) , up 3.23%
- AQR Managed Futures Strategy Fund (AQMIX), up 2.84%
- Fidelity® Select Gold Portfolio (FSAGX) , down -4.11%
- Janus Henderson Contrarian Fund (JCNCX), down -4.56%
- Invesco S&P MidCap Low Volatility ETF (XMLV) , down -5.14%
- VanEck Vectors Agribusiness ETF (MOO), down -5.27%
Among the sectors, cannabis focused strategies outperformed others by a signiifcant margin. However, clean energy and innovative technology-based strategies continued to be on the losing end.
- AdvisorShares Pure US Cannabis ETF (MSOS) , up 47.69%
- Global X Uranium ETF (URA), up 8.78%
- Fidelity® Select Software & IT Services Portfolio (FSCSX) , up 4.7%
- Fidelity® Select Energy Portfolio (FSENX), up 4.54%
- Gabelli Utilities Fund (GABUX) , down -6.48%
- John Hancock Regional Bank Fund (FRBAX), down -10.79%
- Invesco WilderHill Clean Energy ETF (PBW) , down -11.81%
- Amplify Transformational Data Sharing ETF (BLOK), down -11.83%
Every week, MutualFunds.com provides a snapshot of the performance of some key mutual funds and ETFs to highlight the trending investment strategies across different sectors, geographic regions, asset classes and themes. MutualFunds.com uses a proprietary system to scan through thousands of relevant mutual funds and ETFs. Fund performance data is calculated for the trailing one month, based on the change in NAV.
Here is a summary of the different strategies covered in this article:
- U.S. equity strategies typically cover different equity investing styles (growth/value/blend) and market capitalizations (small/mid/large).
- Dividend strategies focus on generating income via different equity routes (high yield/dividend growth/foreign dividend/quality dividend)
- U.S. fixed income strategies focus on debt securities issued by U.S. entities and can cover different types of debt (corporate/municipal/high-yield/investment-grade/government/asset-backed) and maturity profiles (short/medium/long).
- Foreign equity strategies cover equity strategies applied to non-U.S. markets based on the level of economic growth (emerging/developed), regions (Asia/Europe/Africa), and market capitalizations (small/mid/large).
- Foreign fixed income strategies focus on debt securities issued outside the U.S. markets and can cover different regions (Asia/Europe/Africa) and regions based on the level of economic development (emerging/developed).
- Alternative strategies cover non-traditional investments (currencies, hedge funds strategies, derivatives, volatility-based), real estate, and commodities.
- Sector strategies cover dedicated exposure to various sectors of the U.S. economy including technology, healthcare, financial, and industrial among others.