Stocks spent much of the week trending lower as yields rose amid better economic data and the threat of Hurricane Milton hitting the Gulf.
A strong jobs report the week prior, as well as a higher-than-expected CPI report on Wednesday, gave many investors pause on the path of rate cuts. Heading into the week, FedWatch tools indicated that investors expected another 0.50% cut. The Federal Open Market Committee (FOMC) meeting minutes also helped create a cautious tone, with many Federal Reserve governors expressing concerns about future cuts. In addition, Governor Bowman opposed the 0.50% cut, marking the first central bank governor to dissent on a rate decision since 2005. Overall, it was a cautious tone for the week and the major averages reflected that feeling.
Next week, investors will focus on corporate earnings reports. Key to that kick-off will be the major banks. Investors will look to gain insight into the health of the consumer economy and business lending climate. Also playing into investors’ considerations about the economy will be retail sales figures, which are expected to increase by 0.2%. Additionally, housing data will be released, with building permits and housing starts both expected to show marked improvements as mortgage rates continue to decline. Meanwhile, oil rig and energy inventory data will be closely watched and should be impacted by the recent wave of storms in the Gulf of Mexico.
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 markets continued to move up.
Chinese equity continued to post solid gains over the rolling month, while some long-duration bond strategies struggled.
U.S Equity Strategies
Among U.S. equities, several growth strategies continued to post solid gains for the rolling month.
Winning
- Alger Focus Equity Fund (ALZFX), up 12.92%
- Spyglass Growth Fund (SPYGX), up 12.87%
- First Trust US Equity Opportunities ETF (FPX), up 11.38%
- iShares Russell Mid-Cap Growth ETF (IWP), up 8.79%
- iShares Micro-Cap ETF (IWC), up 3.06%
- iShares Core S&P U.S. Value ETF (IUSV), up 2.15%
Losing
- Fidelity® Series Small Cap Opportunities Fund (FSOPX), down -1.63%
- Fidelity® Value Discovery Fund (FVDFX), down -2.13%
Dividend Strategies
Quality dividend strategies posted moderate gains, while international dividend strategies were in the red for the rolling month.
Winning
- HCM Dividend Sector Plus Fund (HCMNX), up 7.28%
- Fidelity Advisor® Dividend Growth Fund (FDGTX), up 6.97%
- Invesco BuyBack Achievers ETF (PKW), up 6.26%
- WisdomTree U.S. Quality Dividend Growth Fund (DGRW), up 5.13%
Losing
- American Century Equity Income Fund (AEURX), down -0.11%
- Principal Global Diversified Income Fund (PGBAX), down -0.49%
- iShares International Select Dividend ETF (IDV), down -0.61%
- SPDR® S&P International Dividend ETF (DWX), down -3.1%
U.S. Fixed Income Strategies
In US fixed income, convertible and high-yield bond plays continued to post modest gains, while long-duration bond strategies lost ground.
Winning
- ProShares Short 20+ Year Treasury (TBF), up 5.07%
- iShares Convertible Bond ETF (ICVT), up 4.5%
- Fidelity® Capital & Income Fund (FAGIX), up 2.72%
- Fidelity Advisor® High Income Advantage Fund (FAHYX), up 2.67%
Losing
- SPDR® Portfolio Long Term Treasury ETF (SPTL), down -4.85%
- iShares 20+ Year Treasury Bond ETF (TLT), down -5.54%
- Vanguard Extended Duration Treasury Index Fund (VEDIX), down -6.78%
- PIMCO Extended Duration Fund (PEDPX), down -7.18%
Foreign Equity Strategies
Among foreign equities, Chinese equity strategies posted solid gains, while Brazilian equity strategies struggled.
Winning
- WisdomTree China ex-State-Owned Enterprises Fund (CXSE), up 32.71%
- iShares MSCI China ETF (MCHI), up 27.94%
- Fidelity® China Region Fund (FHKCX), up 19.85%
- Fidelity® Emerging Asia Fund (FSEAX), up 19.78%
Losing
- Pear Tree Polaris Foreign Value Small Cap Fund (QUSIX), down -0.49%
- AMG TimesSquare International Small Cap Fund (TCMPX), down -0.64%
- SPDR® Dow Jones International Real Estate ETF (RWX), down -3.03%
- iShares MSCI Brazil ETF (EWZ), down -3.77%
Foreign Fixed Income Strategies
Emerging market debt strategies posted marginal gains over the rolling month.
Winning
- John Hancock Funds Emerging Markets Debt Fund (JEMIX), up 1.02%
- Ashmore Emerging Markets Total Return Fund (EMKIX), up 1%
- VanEck Emerging Markets High Yield Bond ETF (HYEM), up 0.92%
Losing
- iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB), down -0.09%
- iShares International Treasury Bond ETF (IGOV), down -1.93%
- Templeton Global Bond Fund (TGBAX), down -2.05%
- SPDR® Bloomberg Barclays International Treasury Bond ETF (BWX), down -2.34%
- DFA World ex U.S. Government Fixed Income Portfolio (DWFIX), down -2.63%
Alternatives
Among alternatives, several contrarian strategies posted gains over the rolling month.
Winning
- Fidelity® Contrafund® Fund (FCNKX), up 7.89%
- Janus Henderson Contrarian Fund (JCNCX), up 7.69%
- WisdomTree Japan Hedged Equity Fund (DXJ), up 7.52%
- iShares Currency Hedged MSCI Japan ETF (HEWJ), up 7.28%
Losing
- Janus Henderson Mortgage-Backed Securities ETF (JMBS), down -2.01%
- Fidelity® Series Commodity Strategy Fund (FCSSX), down -4.12%
- PIMCO TRENDS Managed Futures Strategy Fund (PQTIX), down -4.74%
- ETFMG Alternative Harvest ETF (MJ), down -5.97%
Sectors
Among the sectors and industries, Chinese tech and semiconductor strategies were the top performers.
Winning
- Invesco China Technology ETF (CQQQ), up 40.61%
- Global X MSCI China Consumer Discretionary ETF (CHIQ), up 37%
- Fidelity® Select Semiconductors Portfolio (FSELX), up 16.17%
- Fidelity Advisor® Semiconductors Fund (FIKGX), up 16.01%
Losing
- AdvisorShares Pure US Cannabis ETF (MSOS), down -3.78%
- MassMutual Select Blue Chip Growth Fund (MBGFX), down -5.97%
- Stone Ridge High Yield Reinsurance Risk Premium Fund (SHRIX), down -8.4%
- ProShares Short QQQ (PSQ), down -9.05%
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.