Stocks remained volatile last week, a period shortened due to the Labour Day holiday.
A mixture of sub-par earnings reports and bullish data were the major culprits of the volatility. Semiconductor firm Broadcom reported decent earnings, but provided a mixed guidance picture, leading investors to sell risk and tech during the first half of the week. A lower Job Openings and Labor Turnover Survey (JOLTS) number and a steady unemployment figure helped boost equities as trading got underway on Friday, as did a steady Services PMI. However, the weaker than expected nonfarm payrolls report ultimately caused investors to abandon equities on the final trading day of the week. The declining labor market is expected to help the Federal Reserve cut rates at its next meeting in mid-September.
Next week will be critical for investors as the final CPI reading comes in before the Federal Reserve makes its interest rate decision. The measure of the annual inflation rate in the U.S. is expected to dip to just 2.6%. That should be enough ammo for the central bank to begin easing monetary policy. A softening producer price index (PPI) should also provide the basis for lower rates going forward. FedWatch tools peg the chance of a cut at almost 100%.
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 continued to move up.
Financial and Japanese equity strategies posted some of the best performances over the rolling month. Meanwhile, cannabis strategies struggled.
U.S Equity Strategies
Among U.S. equities, several growth strategies continued to post gains for the rolling month.
Winning
- Spyglass Growth Fund (SPYGX), up 12.76%
- Morgan Stanley Institutional Fund, Inc. Growth Portfolio (MSEGX), up 9.4%
- First Trust US Equity Opportunities ETF (FPX), up 6.32%
- Schwab U.S. Large-Cap Value ETF™ (SCHV), up 6.15%
- iShares S&P Mid-Cap 400 Growth ETF (IJK), up 2.88%
- SPDR® S&P 400 Mid Cap Growth ETF (MDYG), up 2.82%
Losing
Dividend Strategies
International and dividend growth strategies posted positive performance while small cap dividend strategies struggled.
Winning
- Invesco S&P Ultra Dividend Revenue ETF (RDIV), up 7.69%
- SPDR® S&P International Dividend ETF (DWX), up 7.16%
- PGIM Jennison Global Equity Income Fund (JDEZX), up 6.83%
- Pioneer Equity Income Fund (PEQIX), up 6.77%
- ProShares Russell 2000 Dividend Growers ETF (SMDV), up 4.17%
- ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL), up 3.95%
- Principal Global Diversified Income Fund (PGBAX), up 0.92%
Losing
- Hartford Dividend and Growth HLS Fund (HIADX), down -0.41%
U.S. Fixed Income Strategies
In US fixed income, long duration strategies continued to rally.
Winning
- PIMCO StocksPLUS® Long Duration Fund (PSLDX), up 6.91%
- Invesco CEF Income Composite ETF (PCEF), up 3.9%
- BlackRock Dynamic High Income Portfolio (BDHAX), up 3.2%
- iShares Convertible Bond ETF (ICVT), up 2.74%
Losing
- iShares California Muni Bond ETF (CMF), down -0.45%
- ProShares Short 20+ Year Treasury (TBF), down -0.84%
- Delaware Tax Free USA Fund (DTFIX), down -1.18%
- Pioneer AMT Free Municipal Fund (PBMFX), down -1.72%
Foreign Equity Strategies
Among foreign equities, Japanese equity strategies continued to post gains, while Mexican and Chinese strategies struggled.
Winning
- iShares MSCI Japan ETF (EWJ), up 12.31%
- JPMorgan BetaBuilders Japan ETF (BBJP), up 12.28%
- T. Rowe Price Japan Fund (RJAIX), up 11.8%
- Matthews Japan Fund (MJFOX), up 11.76%
- Fidelity Advisor® Emerging Asia Fund (FEAAX), up 1.57%
- Fidelity® Emerging Asia Fund (FSEAX), up 1.47%
Losing
- Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR), down -1.24%
- iShares MSCI Mexico ETF (EWW), down -1.29%
Foreign Fixed Income Strategies
The majority of the foreign market debt strategies were slightly up over the rolling month.
Winning
- John Hancock Funds Emerging Markets Debt Fund (JEMIX), up 2.36%
- Invesco International Bond Fund (OIBIX), up 2.33%
- iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB), up 2.22%
- VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC), up 1.53%
- SPDR® Bloomberg Barclays International Treasury Bond ETF (BWX), up 0.97%
- VanEck Emerging Markets High Yield Bond ETF (HYEM), up 0.52%
- Janus Henderson Developed World Bond Fund (HFARX), up 0.26%
- DFA World ex U.S. Government Fixed Income Portfolio (DWFIX), up 0.12%
Alternatives
Among alternatives, hedged Japanese strategies continued to post gains over the rolling month, while managed futures strategies struggled.
Winning
- WisdomTree Japan Hedged Equity Fund (DXJ), up 15.12%
- iShares Currency Hedged MSCI Japan ETF (HEWJ), up 14.15%
- Janus Henderson Contrarian Fund (JCNCX), up 7.15%
- Fidelity® Select Gold Portfolio (FSAGX), up 6.52%
Losing
- iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT), down -0.24%
- American Beacon AHL Managed Futures Strategy Fund (AHLYX), down -1.5%
- PIMCO TRENDS Managed Futures Strategy Fund (PQTIX), down -2.02%
- ETFMG Alternative Harvest ETF (MJ), down -5.04%
Sectors
Among the sectors and industries, financial sector strategies were the top performers while cannabis struggled.
Winning
- ProShares Ultra Financials (UYG), up 19.26%
- ETFMG Prime Mobile Payments ETF (IPAY), up 11.37%
- T. Rowe Price Financial Services Fund (TFIFX), up 9.52%
- John Hancock Regional Bank Fund (FRBAX), up 9.41%
- Goldman Sachs MLP Energy Infrastructure Fund (GLPSX), up 1.1%
- Fidelity® Select Energy Portfolio (FSENX), up 0.95%
Losing
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.