Twenty-sixteen is proving to be quite a cyclical year. What started as a free fall for stocks, world stocks, bonds, and commodities in the first two months ended with a quick recovery the months following. At one point the current leaders on the scoreboard were down -7.74% (World Stocks) -7.25% (Commodities) -5.11% (Stocks) and -4.80% (Real Estate). Now all of those are not just up on the year, but stocks are almost double digits, with long-only commodities up +5.08% due to the recent surge in crude oil {Disclaimer: Past performance is not necessarily indicative of future results).
Source: All ETF performance data from Morningstar.com
Sources: Managed Futures = SG CTA Index, Cash = 13 week T-Bill rate,
Bonds = Vanguard Total Bond Market ETF (BND),
Hedge Funds= IQ Hedge Multi-Strategy (QAI)
Commodities = iShares GSCI ETF (GSG);
Real Estate = iShares DJ Real Estate ETF (IYR);
World Stocks = iShares MSCI ACWI ex US Index Fund ETF (ACWX);
US Stocks = SPDR S&P 500 ETF (SPY)
On the other side of the cycle, Real Estate was at once up 16% on the year, and has given back 14% of that over the last four months. Managed Futures was once up 7.27% to start the year and is now -3.34% in the red YTD.
Stocks are screaming to new all-time highs after the election, the U.S. Dollar is following suit, and surges in Copper and Crude (while gold is in free fall). If we would have told you this is what the markets would look like one month into Trump winning the election, you would have called us naïve. As for Managed Futures, there’s hope in the air despite having four consecutive months of negative returns. Now that these trends have started managers are hoping they are here to stay — so they can get in on them to return to the black before years’ end. Here’s hoping.
