The major indices spent much of last week mixed ahead of the Federal Reserve’s Jackson Hole summit on Friday.
The latest FOMC meeting minutes, which were released on Wednesday ahead of the summit, showed that the Federal Reserve believed further meaningful progress toward the 2% inflation goal had been achieved. However, inflation still remains elevated and economic activity has started to expand at a robust pace. These competing factors put policymakers in an interesting position, according to the minutes. Analysts continue to expect the Fed will cut in September and looked towards prepared remarks made by Chairman Powell and other governors over the weekend. Other economic data on the week, such as energy information and housing-related metrics, didn’t have much of an effect on markets. M&A was alive and well, meanwhile, as struggling coal giants CONSOL and Arch agreed to merge in a $5.2 billion deal.
Next week will feature one of the most critical pieces of data before the Fed makes its interest rate decision. The central bank’s favorite inflation reading, the Core PCE Price Index, rose by 0.2% in June. This was above market expectations and represented an acceleration of overall inflation. The market will be watching July’s figure closely to see if the Fed can cut benchmark rates in September. The latest FedWatch tool, based on Fed Fund futures, still indicates that a cut will happen. A poor durable goods reading at the beginning of the week could also provide information on just how the economy is doing and increase the potential for the start of a Fed easing cycle. Personal spending and income data will also be released on the week. Both data points still show a strong consumer, albeit one that has been pulling back in recent months. Analysts expect both figures to increase slightly.
Given this economic backdrop, let us see how this impacts the performance of various investment strategies.
Investment Strategy Scorecard
Overall, for the rolling month the broader market showed signs of recovery.
Longer duration bonds posted some of the best performances over the rolling month. Meanwhile, semiconductors continued to struggle.
U.S Equity Strategies
Among U.S. equities, several growth strategies struggled.
Winning
Losing
- iShares Core S&P U.S. Value ETF (IUSV), down -0.03%
- Schwab U.S. Large-Cap Value ETF™ (SCHV), down -0.32%
- iShares Russell 2000 Value ETF (IWN), down -7.31%
- iShares Micro-Cap ETF (IWC), down -10.58%
- VY® T. Rowe Price Growth Equity Portfolio (ITRGX), down -14.59%
- VY® T. Rowe Price Diversified Mid Cap Growth Portfolio (IAXTX), down -15.3%
Dividend Strategies
Several high dividend strategies performed better than others.
Winning
- Invesco S&P 500® High Dividend Low Volatility ETF (SPHD), up 3.89%
- iShares Core High Dividend ETF (HDV), up 3.3%
- DWS CROCI Equity Dividend Fd (KDHSX), up 2.52%
- Federated Hermes Strategic Value Dividend Fund (SVAIX), up 2.4%
Losing
- Principal Small-MidCap Dividend Income Fund (PMDIX), down -3.72%
- ProShares Russell 2000 Dividend Growers ETF (SMDV), down -5.54%
- WisdomTree U.S. SmallCap Dividend Fund (DES), down -5.72%
- HCM Dividend Sector Plus Fund (HCMNX), down -6.9%
U.S. Fixed Income Strategies
In US fixed income, long duration strategies continued to rally.
Winning
- Vanguard Extended Duration Treasury Index Fund (VEDIX), up 8.43%
- PIMCO Extended Duration Fund (PEDPX), up 8.09%
- iShares 20+ Year Treasury Bond ETF (TLT), up 5.8%
- SPDR® Portfolio Long Term Treasury ETF (SPTL), up 5.35%
Losing
- Fidelity® Capital & Income Fund (FAGIX), down -1%
- Fidelity Advisor® High Income Advantage Fund (FAHYX), down -1.11%
- iShares Convertible Bond ETF (ICVT), down -1.47%
- ProShares Short 20+ Year Treasury (TBF), down -5.51%
Foreign Equity Strategies
Among foreign equities, Brazilian equity strategies continued to post gains, while Japanese and European strategies struggled.
Winning
- iShares MSCI Brazil ETF (EWZ), up 7.76%
- SPDR® Dow Jones International Real Estate ETF (RWX), up 4.08%
- Vanguard Emerging Markets Government Bond Index Fund (VGAVX), up 1.44%
- First Eagle Overseas Fund (SGOIX), up 1.35%
Losing
- JPMorgan BetaBuilders Japan ETF (BBJP), down -3.63%
- Fidelity® SAI Japan Stock Index Fund (FSJPX), down -4.14%
- T. Rowe Price Japan Fund (RJAIX), down -4.57%
- WisdomTree Europe Hedged Equity Fund (HEDJ), down -5.96%
Foreign Fixed Income Strategies
Majority of the foreign market debt strategies were slightly up over the rolling month.
Winning
- Templeton Global Bond Fund (TGBAX), up 4.6%
- SPDR® Bloomberg Barclays International Treasury Bond ETF (BWX), up 4.26%
- T. Rowe Price International Bond Fund (PAIBX), up 3.49%
- iShares International Treasury Bond ETF (IGOV), up 3.25%
- iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB), up 1.67%
- Fidelity Advisor® New Markets Income Fund (FNMIX), up 0.55%
- VanEck Emerging Markets High Yield Bond ETF (HYEM), up 0.47%
Losing
- Eaton Vance Emerging Markets Debt Opportunities Fund (EIDOX), down -0.76%
Alternatives
Among alternatives, mortgage strategies were some of the top performers over the rolling month, while hedged Japanese equity strategies continued nto struggle.
Winning
- Columbia Mortgage Opportunities Fund (CLMAX), up 3.62%
- Fidelity Advisor® Mortgage Securities Fund (FIKUX), up 2.57%
- SPDR® DoubleLine Total Return Tactical ETF (TOTL), up 2.52%
- SPDR® SSGA US Large Cap Low Volatility Index ETF (LGLV), up 2.51%
Losing
- Abbey Capital Futures Strategy Fund (ABYIX), down -4.43%
- AlphaSimplex Managed Futures Strategy Fund (AMFAX), down -6.99%
- iShares Currency Hedged MSCI Japan ETF (HEWJ), down -8.71%
- WisdomTree Japan Hedged Equity Fund (DXJ), down -9.46%
Sectors
Among the sectors and industries, utilities were the top performer while semiconductors continued to struggle.
Winning
- KraneShares Global Carbon ETF (KRBN), up 5.91%
- Utilities Select Sector SPDR® Fund (XLU), up 5.46%
- Franklin Utilities Fund (FKUTX), up 5.02%
- Vanguard Utilities Index Fund (VUIAX), up 4.93%
Losing
- John Hancock Regional Bank Fund (FRBAX), down -7.58%
- American Beacon ARK Transformational Innovation Fund (ADNYX), down -11.9%
- SPDR® S&P Semiconductor ETF (XSD), down -13.36%
- Invesco WilderHill Clean Energy ETF (PBW), down -17.52%
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.