During the first full trading week of the year, markets opened lower as bond yields returned to levels not seen since 2023, with the 10-year yield climbing close to 5%.

This shift was driven by concerns over rising inflation, new potential tariffs on aluminum, and Federal Open Market Committee (FOMC) meeting minutes indicating that central bankers were increasingly worried about price pressures. Labor data contributed to the cautious mood, as the Job Openings and Labor Turnover Survey (JOLTS) results combined with a decline in initial jobless claims to 201,000, below estimates, helped frame a riskier economic environment.

Looking ahead, markets may continue to see volatility as investors digest key inflation data, with analysts expecting CPI to rise by 0.4% in December after a 0.3% increase in November 2024. Producer Price Index (PPI) figures will follow, along with retail sales numbers covering the crucial holiday spending period, where only a slight uptick is anticipated. The FedWatch tool currently points to two more rate cuts this year, though indications of persistent inflation may influence how aggressively policymakers proceed. Friday’s housing data, which has signaled bullish trends in recent updates, is also on the schedule and could offer further insight into economic momentum.

Given this economic backdrop, let us see how this impacts the performance of various investment strategies.

The broader markets continued to be in the red for the rolling month.

Real estate and oil strategies were among the top performers for the rolling month, while several Chinese equity strategies struggled.

U.S Equity Strategies

Among U.S. equities, several small-cap and growth-focused strategies struggled for the rolling month.

Winning

• The Hartford Growth Opportunities Fund (HGOCX), up 0.37%

Losing

• Alger Focus Equity Fund (ALZFX), down -0.34%
• iShares Core S&P U.S. Growth ETF (IUSG), down -1.09%
• Schwab U.S. Large-Cap Growth ETF™ (SCHG), down -1.26%
• SPDR® S&P 600 Small Cap Value ETF (SLYV), down -7.38%
• iShares Russell 2000 Value ETF (IWN), down -7.67%
• Lazard US Equity Concentrated Portfolio (LEVOX), down -59.35%
• AB Growth Fund (AGRCX), down -69.47%

Dividend Strategies

The majority of the dividend strategies continued to be in the red over the rolling month.

Losing

• Thornburg Investment Income Builder Fund (TIBAX), down -0.08%
• Principal Global Diversified Income Fund (PGBAX), down -1.82%
• Fidelity® High Dividend ETF (FDVV), down -3.13%
• Fidelity® Dividend ETF for Rising Rates (FDRR), down -3.22%
• WisdomTree U.S. SmallCap Dividend Fund (DES), down -7.44%
• ProShares Russell 2000 Dividend Growers ETF (SMDV), down -9.82%
• USAA Income Stock Fund (UIISX), down -17.67%
• Sterling Capital Equity Income Fund (BEGIX), down -23.68%

U.S. Fixed Income Strategies

Several long-duration bond strategies continued to be in the red for the rolling month.

Winning

• ProShares Short 20+ Year Treasury (TBF), up 7.93%
• ProShares Investment Grade—Interest Rate Hedged (IGHG), up 0.58%
• JPMorgan Strategic Income Opportunities Fund (JSOSX), up 0.35%
• Credit Suisse Floating Rate High Income Fund (CSHIX), flat 0%

Losing

• SPDR® Portfolio Long Term Treasury ETF (SPTL), down -7.16%
• iShares 20+ Year Treasury Bond ETF (TLT), down -8.01%
• Vanguard Extended Duration Treasury Index Fund (VEDIX), down -11.56%
• PIMCO Extended Duration Fund (PEDPX), down -11.82%

Foreign Equity Strategies

Several emerging market strategies, especially Chinese equities, continued to struggle for the rolling month.

Winning

• iShares MSCI South Korea ETF (EWY), up 1.21%

Losing

• WisdomTree Europe Hedged Equity Fund (HEDJ), down -0.45%
• Delaware Emerging Markets Fund (DEMRX), down -1.21%
• Morgan Stanley Institutional Fund, Inc. International Advantage Portfolio (MFAIX), down -2.48%
• SPDR® S&P China ETF (GXC), down -13.02%
• WisdomTree China ex-State-Owned Enterprises Fund (CXSE), down -13.53%
• American Beacon International Equity Fund (AAISX), down -21.88%
• Morgan Stanley Institutional Fund, Inc. International Equity Portfolio (MSIQX), down -30.69%

Foreign Fixed Income Strategies

Several global and emerging market debt strategies continued to post losses for the rolling month.

Winning

• T. Rowe Price Dynamic Global Bond Fund (TRDZX), up 1.42%
• Invesco International Bond Fund (OIBIX), up 0.69%

Losing

• VanEck Emerging Markets High Yield Bond ETF (HYEM), down -0.46%
• SPDR® Bloomberg Barclays Emerging Markets Local Bond ETF (EBND), down -2.24%
• iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB), down -3.24%
• DFA World ex U.S. Government Fixed Income Portfolio (DWFIX), down -3.92%
• SPDR® Bloomberg Barclays International Treasury Bond ETF (BWX), down -4.43%
• Templeton Global Bond Fund (TGBAX), down -4.71%

Alternatives

Among alternatives, commodity and managed futures strategies posted nominal gains over the rolling month, while some low-volatility strategies continued to struggle.

Winning

• iShares S&P GSCI Commodity-Indexed Trust (GSG), up 3.97%
• PIMCO TRENDS Managed Futures Strategy Fund (PQTIX), up 2.04%
• Fidelity® Series Commodity Strategy Fund (FCSSX), up 1.67%
• IQ Merger Arbitrage ETF (MNA), up 1.28%

Losing

• VanEck Vectors Agribusiness ETF (MOO), down -9.42%
• ETFMG Alternative Harvest ETF (MJ), down -10.8%
• SEI Institutional Investments Trust Global Managed Volatility Fund (SGMAX), down -13.79%
• Mercer Global Low Volatility Equity Fund (MGLVX), down -42.89%

Sectors

Among the sectors and industries, real estate and oil strategies posted gains while materials and Chinese tech strategies struggled.

Winning

• iShares Mortgage Real Estate Capped ETF (REM), up 50%
• United States Oil Fund, LP (USO), up 8.61%
• Center Coast Brookfield Midstream Focus Fund (CCCAX), up 2.17%
• Goldman Sachs MLP Energy Infrastructure Fund (GLPSX), up 1.32%

Losing

• Invesco China Technology ETF (CQQQ), down -15%
• Fidelity® Select Materials Portfolio (FSDPX), down -16.06%
• KraneShares CSI China Internet ETF (KWEB), down -17.57%
• Transamerica International Focus (TGRFX), down -20%

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.