Stocks were volatile last week as traders took profits after AI stocks surged.
A variety of tech firms and chipmakers saw their gains evaporate as analysts and investors began questioning the promise of AI. Continued poor earnings and guidance from these firms and other bellwethers sent the major averages lower for the first half of the week– with some of the worst losses since the pandemic. However, by the end of the week stocks had rebounded. A lower services PMI report as well as high jobless claims reinforced the Fed’s potential to cut rates in the near term.
Next week, investors will have the final piece of the Fed’s puzzle before their latest interest rate decision. The official CPI report will be released at 8:30am on Wednesday. The rate of consumer price inflation fell for a third straight month to 3% in June 2024. This was the lowest reading since June 2023. Analysts expect the trend to have continued in July, allowing the Fed to cut rates. After their previous flat reading, retail sales are also expected to show a bearish picture. This could provide more ammo for a Fed cut as the consumer economy continues to slow.
Given this economic backdrop, let us see how this impacts the performance of various investment strategies.
Investment Strategy Scorecard
Overall, for the rolling month major market indexes continued to be in the red, especially the technology sector.
Home construction and regional banking strategies outperformed others over the rolling month. Meanwhile, semiconductors continue to be in the red.
U.S Equity Strategies
Among U.S. equities, several small cap strategies posted solid performances for the rolling month, while large cap strategies struggled.
Winning
- Nuance Mid Cap Value Fund (NMAVX), up 7.28%
- Invesco S&P SmallCap 600 Revenue ETF (RWJ), up 7.14%
- Undiscovered Managers Behavioral Value Fund (UBVLX), up 7.1%
- iShares S&P Small-Cap 600 Value ETF (IJS), up 6.06%
Losing
- Fidelity® Nasdaq Composite Index® ETF (ONEQ), down -8.82%
- iShares Morningstar Growth ETF (ILCG), down -8.93%
- BlackRock Advantage Large Cap Growth Fund (BMCKX), down -15.65%
- VY® T. Rowe Price Growth Equity Portfolio (ITRGX), down -19.92%
Dividend Strategies
Several dividend growth strategies continued to rally over the rolling month.
Winning
- ProShares Russell 2000 Dividend Growers ETF (SMDV), up 10.81%
- Legg Mason Low Volatility High Dividend ETF (LVHD), up 9.27%
- Federated Hermes Strategic Value Dividend Fund (SVAIX), up 7.54%
- DWS CROCI Equity Dividend Fd (KDHSX), up 5.26%
Losing
- WisdomTree U.S. Quality Dividend Growth Fund (DGRW), down -1.24%
- Fidelity® Dividend ETF for Rising Rates (FDRR), down -1.98%
- Fidelity® Dividend Growth Fund (FDGFX), down -5.56%
- HCM Dividend Sector Plus Fund (HCMNX), down -7.53%
U.S. Fixed Income Strategies
In US fixed income, long duration strategies continued to rally.
Winning
- Vanguard Extended Duration Treasury Index Fund (VEDIX), up 8.2%
- PIMCO Extended Duration Fund (PEDPX), up 8.2%
- iShares 20+ Year Treasury Bond ETF (TLT), up 5.95%
- SPDR® Portfolio Long Term Treasury ETF (SPTL), up 5.87%
Losing
- Fidelity Advisor® High Income Advantage Fund (FAHYX), down -1.62%
- Fidelity® Capital & Income Fund (FAGIX), down -1.7%
- iShares Interest Rate Hedged Long-Term Corporate Bond ETF (IGBH), down -2.63%
- ProShares Short 20+ Year Treasury (TBF), down -5.67%
Foreign Equity Strategies
Among foreign equities, international real estate strategies rallied, while emerging market strategies continued to struggle.
Winning
- SPDR® Dow Jones International Real Estate ETF (RWX), up 4.43%
- Morgan Stanley Institutional Fund, Inc. Global Franchise Portfolio (MSGFX), up 3.2%
- iShares MSCI Switzerland ETF (EWL), up 3.05%
- Oakmark International Fund (OANEX), up 1.95%
Losing
- iShares Asia 50 ETF (AIA), down -8.79%
- PGIM Jennison Emerging Markets Equity Opportunities Fund (PDEZX), down -10.54%
- iShares MSCI Taiwan ETF (EWT), down -10.58%
- Delaware Emerging Markets Fund (DEMRX), down -12.45%
Foreign Fixed Income Strategies
Majority of the foreign market debt strategies were slightly up over the rolling month.
Winning
- SPDR® Bloomberg Barclays International Treasury Bond ETF (BWX), up 4.48%
- Janus Henderson Developed World Bond Fund (HFARX), up 3.56%
- T. Rowe Price International Bond Fund (PAIBX), up 3.52%
- iShares International Treasury Bond ETF (IGOV), up 3.14%
- VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC), up 1.08%
- VanEck Emerging Markets High Yield Bond ETF (HYEM), up 0.42%
- Payden Emerging Markets Bond Fund (PYEIX), up 0.39%
Losing
- Eaton Vance Emerging Markets Debt Opportunities Fund (EIDOX), down -0.76%
Alternatives
Among alternatives, small and mid-cap low volatility strategies were the top performers over the rolling month, while hedged Japanese equity strategies struggled.
Winning
- Invesco S&P SmallCap Low Volatility ETF (XSLV), up 6.57%
- Invesco S&P MidCap Low Volatility ETF (XMLV), up 6.35%
- PIMCO RAE Worldwide Long/Short PLUS Fund (PWLBX), up 5.3%
- Columbia Mortgage Opportunities Fund (CLMAX), up 5.04%
Losing
- Fidelity® Contrafund® Fund (FCNKX), down -7.03%
- AlphaSimplex Managed Futures Strategy Fund (AMFAX), down -7.53%
- iShares Currency Hedged MSCI Japan ETF (HEWJ), down -15.25%
- WisdomTree Japan Hedged Equity Fund (DXJ), down -15.76%
Sectors
Among the sectors and industries, home construction was the top performer while semiconductors continue to be in the backseat.
Winning
- iShares U.S. Home Construction ETF (ITB), up 17.57%
- SPDR® S&P Regional Banking ETF (KRE), up 12.26%
- John Hancock Regional Bank Fund (FRBAX), up 12.24%
- Fidelity® Select Health Care Services Portfolio (FSHCX), up 11.45%
Losing
- Fidelity Advisor® Semiconductors Fund (FIKGX), down -18.88%
- Fidelity® Select Semiconductors Portfolio (FSELX), down -19.03%
- VanEck Vectors Semiconductor ETF (SMH), down -20.34%
- Invesco Dynamic Semiconductors ETF (PSI), down -23.26%
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.