This week, markets remained volatile as the Federal Open Market Committee (FOMC) kept the federal funds rate unchanged at 5.25%-5.50% at its May meeting, marking the sixth consecutive time the Fed elected not to change its benchmark rate.
High inflation and a strong labor market continue to put pressure on the central bank. The bullish Job Openings and Labor Turnover Survey (JOLTS) report and jobless claims figures supported this trend. However, investors did get some bullish news from the Fed as Chair Jerome Powell mentioned that rate hikes may not be on the table as “current policy is sufficiently restrictive to achieve the 2% inflation target.” Apple’s huge $115 billion buyback and Google’s dividend announcement both helped lift the technology sector amid the Federal Reserve’s latest rate decision.
After a volatile week, investors are likely to get a slight break heading into the first full trading week of May. Economic data will be light. The two biggest data points will be the weekly jobless figures and the latest consumer sentiment report. The labor market has remained a bright spot in the economy and analysts predict this trend to continue. Initial jobless claims for the week are expected to clock in at 211,000, a marginal uptick from last week. As for consumer sentiment, it’s been declining over the last few months. The continued pressure of higher prices along with high rates is starting to crimp consumer spending. The University of Michigan Consumer sentiment report was revised down in April to 77.2, drifting lower from March’s high of 79.4. However, analysts expect an increase to 78 as spending trends have started to improve once again.
Given this economic backdrop, let us see how this impacts the performance of various investment strategies.
Investment Strategy Scorecard
Overall, major U.S. stock indices continued to be in the red for the rolling month.
Chinese equity strategies managed to post positive returns for the rolling month. Meanwhile, growth strategies, especially tech and biotech continued to struggle.
U.S Equity Strategies
Among U.S. equities, several growth-focused strategies continued their struggle to post positive returns.
Winning
Losing
- SPDR® S&P 600 Small Cap Growth ETF (SLYG), down -0.7%
- iShares S&P Small-Cap 600 Growth ETF (IJT), down -0.7%
- Franklin LibertyQ U.S. Equity ETF (FLQL), down -3.51%
- Invesco Dynamic Large Cap Growth ETF (PWB), down -4.11%
- Touchstone Sands Capital Select Growth Fund (TSNCX), down -6.03%
- Baron Growth Fund (BGRUX), down -6.04%
Dividend Strategies
A majority of dividend strategies continued to post losses over the rolling month.
Winning
- First Trust Dow Jones Global Select Dividend Index Fund (FGD), up 0.67%
- ProShares Russell 2000 Dividend Growers ETF (SMDV), up 0.45%
Losing
- First Eagle Global Income Builder Fund (FEBIX), down -0.23%
- Federated Hermes Strategic Value Dividend Fund (SVAIX), down -0.54%
- FlexShares Quality Dividend Index Fund (QDF), down -3.75%
- DWS CROCI Equity Dividend Fd (KDHSX), down -3.86%
- Invesco BuyBack Achievers ETF (PKW), down -4.02%
- HCM Dividend Sector Plus Fund (HCMNX), down -4.67%
U.S. Fixed Income Strategies
In US fixed income, long duration debt strategies continued to struggle.
Winning
- ProShares Short 20+ Year Treasury (TBF), up 3.79%
- Thompson Bond Fund (THOPX), up 0.59%
- iShares Floating Rate Bond ETF (FLOT), up 0.58%
- DFA Five Year Global Fixed Income Portfolio (DFGBX), up 0.5%
Losing
- PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund (LTPZ), down -3.1%
- iShares 20+ Year Treasury Bond ETF (TLT), down -3.37%
- PIMCO Extended Duration Fund (PEDPX), down -5.16%
- PIMCO StocksPLUS® Long Duration Fund (PSLDX), down -5.25%
Foreign Equity Strategies
Among foreign equities, Chinese equity strategies continued to post solid performances, while South Korean and Mexican strategies struggled.
Winning
- iShares MSCI China ETF (MCHI), up 9.8%
- WisdomTree China ex-State-Owned Enterprises Fund (CXSE), up 8.92%
- Fidelity® China Region Fund (FHKCX), up 4.33%
- Fidelity Advisor® Focused Emerging Markets Fund (FAMKX), up 3.37%
Losing
- iShares MSCI South Korea ETF (EWY), down -3.31%
- iShares MSCI Mexico ETF (EWW), down -4.39%
- Franklin International Growth Fund (FNGZX), down -4.93%
- JOHCM International Select Fund (JOHIX), down -5.68%
Foreign Fixed Income Strategies
The majority of foreign fixed income strategies were in the red, with several emerging debt strategies struggling.
Losing
- VanEck Emerging Markets High Yield Bond ETF (HYEM), down -0.32%
- Eaton Vance Emerging Markets Debt Opportunities Fund (EIDOX), down -0.64%
- DFA World ex U.S. Government Fixed Income Portfolio (DWFIX), down -1.07%
- VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC), down -1.11%
- SPDR® Bloomberg Barclays International Treasury Bond ETF (BWX), down -1.36%
- SPDR® Bloomberg Barclays Emerging Markets Local Bond ETF (EBND), down -1.62%
- Eaton Vance Emerging Markets Local Income Fund (EEIIX), down -2.33%
- Templeton Global Bond Fund (TGBAX), down -2.9%
Alternatives
Among alternatives, gold strategies posted strong results over the rolling month, while agriculture, low volatility, and contrarian strategies struggled.
Winning
- Fidelity® Select Gold Portfolio (FSAGX), up 2.67%
- DWS Enhanced Commodity Strategy Fund (SKSRX), up 1.57%
- ETFMG Alternative Harvest ETF (MJ), up 1.44%
- WisdomTree Japan Hedged Equity Fund (DXJ), up 0.53%
Losing
- Janus Henderson Contrarian Fund (JCNCX), down -3.36%
- SPDR® Russell 1000 Low Volatility Focus ETF (ONEV), down -3.95%
- SEI Institutional Investments Trust U.S. Managed Volatility Fund (SVYAX), down -4.01%
- Invesco DB Agriculture Fund (DBA), down -5.29%
Sectors
Among the sectors and industries, carbon and Chinese equity strategies posted strong performance, while some tech and biotech strategies struggled.
Winning
- KraneShares Global Carbon ETF (KRBN), up 13.4%
- KraneShares CSI China Internet ETF (KWEB), up 11.99%
- Vanguard Utilities Index Fund (VUIAX), up 3.89%
- Franklin Gold and Precious Metals Fund (FGPMX), up 3.87%
Losing
- Fidelity® Select Health Care Services Portfolio (FSHCX), down -7.24%
- Amplify Transformational Data Sharing ETF (BLOK), down -8.77%
- VanEck Oil Services ETF (OIH), down -9.04%
- Fidelity® Select IT Services Portfolio (FBSOX), down -12.23%
Methodology
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.