Over the weekend, lawmakers came to a deal kicking the can on the debt ceiling for another two years. While the implications of the deal are still being debated, it removed one of the major worries from the market. With that, tech stocks surged as estimates for future Fed action showed a potential pause. The number of job openings increased back above 10 million this week with the latest JOLTS report reading. The ISM Manufacturing PMI, however, showed contraction as it fell to 46.9, down from a reading of 47.1 in April and below forecasts of 47. Investors took the poor reading as a sign that the Fed’s policies were working and that an interest rate pause would happen. Also helping on that front was the uptick in the unemployment rate, which increased to 3.7%. This was the highest since October of 2022, but still points to a good labor market.
Next week, as we enter the summer doldrums, economic data will be light. The bulk of the data will focus on the manufacturing and service sectors of the economy. Up first will be the release of the ISM Services PMI on Monday. The figure increased to 51.9 in April, representing the fourth consecutive month of growth and indicating a strong economy. The number is expected to continue rising in May, clocking in at an estimated 52.4. We also get to see the latest month-over-month factory orders reading on Monday. It is estimated to grow by 0.5%, below April’s 0.9% pace of growth, but still continuing to pull away from beginning of the year declines. Rising services and manufacturing demand has continued to be bullish for the labor market. Initial jobless claims on Thursday are expected to come in at 235,000. While trending higher, the number has only increased slightly over the last few readings, indicating that jobs are still plentiful and tech-related layoffs have stabilized. Finally, the Energy Information Agency will release a host of energy inventory data, with analysts still expecting build-ups of crude oil, heating oil and other energy resources.
Given this economic backdrop, let us see how this impacts the performance of various investment strategies.
Investment Strategy Scorecard
U.S Equity Strategies
In U.S. equities, growth strategies outperformed others over the last trailing month. On the other hand, mid and larger cap focused value strategies struggled.
- Virtus Zevenbergen Innovative Growth Stock Fund (SCATX) , up 15.19%
- Spyglass Growth Fund (SPYGX), up 13.31%
- Schwab U.S. Large-Cap Growth ETF™ (SCHG) , up 8.96%
- Fidelity® Nasdaq Composite Index® ETF (ONEQ), up 8.42%
- iShares Russell Mid-Cap Value ETF (IWS) , down -2.14%
- Schwab U.S. Large-Cap Value ETF™ (SCHV), down -2.61%
- Neuberger Berman Large Cap Value Fund (NPNRX) , down -4.65%
- Voya Russell Mid Cap Index Portfolio (IRMCX), down -12.24%
When it comes to dividend income, sector based and rising dividend strategies won while high dividend strategies continued their losing streak.
- HCM Dividend Sector Plus Fund (HCMNX) , up 5.28%
- Vanguard Diversified Equity Fund (VDEQX), up 3.41%
- First Trust Rising Dividend Achievers ETF (RDVY) , up 1.2%
- FlexShares Quality Dividend Index Fund (QDF), up 0.63%
- Cullen High Dividend Equity Fund (CHDEX) , down -3.48%
- Federated Hermes Strategic Value Dividend Fund (SVAIX), down -5.41%
- Invesco High Yield Equity Dividend Achievers™ ETF (PEY) , down -5.46%
- ALPS Sector Dividend Dogs ETF (SDOG), down -5.53%
U.S. Fixed Income Strategies
In US fixed income, strategies focused on shorting longer duration US treasuries along with convertible securities benefited over the last trailing one month, while high yield muni bond and longer duration bond strategies continued to lose.
- ProShares Short 20+ Year Treasury (TBF) , up 2.92%
- iShares Convertible Bond ETF (ICVT), up 2.87%
- Calamos Market Neutral Income (CVSIX) , up 0.76%
- Navigator Tactical Fixed Income Fund (NTBIX), up 0.73%
- iShares 20+ Year Treasury Bond ETF (TLT) , down -2.44%
- Vanguard Extended Duration Treasury Index Fund (VEDIX), down -2.8%
- PIMCO Extended Duration Fund (PEDPX) , down -3.01%
- VanEck Vectors High Yield Muni ETF (HYD), down -25%
Foreign Equity Strategies
Among foreign equity strategies, Brazilian and Taiwanese equity strategies came out as the top performing strategies, while international real estate and Chinese equities continued to struggle.
- iShares MSCI Brazil ETF (EWZ) , up 8.74%
- iShares MSCI Taiwan ETF (EWT), up 7.07%
- Lord Abbett Developing Growth Fund (LADVX) , up 4.22%
- Delaware Emerging Markets Fund (DEMRX), up 4.05%
- JPMorgan Europe Dynamic Fund (JFESX) , down -3.52%
- Voya International Index Portfolio (IIIAX), down -5.98%
- Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) , down -6.59%
- KraneShares Bosera MSCI China A ETF (KBA), down -7.14%
Foreign Fixed Income Strategies
Among foreign debt, while emerging market local currency based debt strategies continue to post marginal gains, internatioal treasury and total return strategies lost.
- Eaton Vance Emerging Markets Debt Opportunities Fund (EIDOX) , up 0.41%
- SPDR® Bloomberg Barclays Emerging Markets Local Bond ETF (EBND), up 0.14%
- VanEck J.P. Morgan EM Local Currency Bond ETF (EMLC) , up 0.12%
- Stone Harbor Emerging Markets Debt Fund (SHMDX), down -0.14%
- PIMCO Emerging Markets Bond Fund (PEBCX) , down -1.37%
- SPDR® Bloomberg Barclays International Treasury Bond ETF (BWX), down -1.78%
- iShares International Treasury Bond ETF (IGOV) , down -1.88%
- Ashmore Emerging Markets Total Return Fund (EMKIX), down -2.28%
Among alternative strategies, Japanese hedged strategies continued to win. On the other end, gold and agriculture strategies struggled.
- WisdomTree Japan Hedged Equity Fund (DXJ) , up 6.11%
- Fidelity® Contrafund® Fund (FCNKX), up 4.99%
- Columbia Contrarian Core Fund (SMGIX) , up 4.03%
- SPDR® Bloomberg Barclays Convertible Securities ETF (CWB), up 2.34%
- BlackRock Commodity Strategies Portfolio (BCSAX) , down -3.77%
- ETFMG Alternative Harvest ETF (MJ), down -7.65%
- VanEck Vectors Agribusiness ETF (MOO) , down -7.97%
- Fidelity® Select Gold Portfolio (FSAGX), down -8.54%
Among the various sectors, technology strategies, especially semiconductors continued to win over the last trailing month. However, real estate, gold and silver strategies continued to be on the losing end.
- Fidelity® Select Semiconductors Portfolio (FSELX) , up 21.99%
- Fidelity Advisor® Semiconductors Fund (FIKGX), up 20.2%
- First Trust Cloud Computing ETF (SKYY) , up 19.52%
- VanEck Vectors Semiconductor ETF (SMH), up 18.63%
- First Eagle Gold Fund (FEGIX) , down -6.17%
- Franklin Gold and Precious Metals Fund (FGPMX), down -6.45%
- ProShares Short QQQ (PSQ) , down -8.87%
- iShares Mortgage Real Estate Capped ETF (REM), down -14.29%
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 proprietory system to scan through thousands of relevant mutual funds and ETFs. To ensure quality and adequate track record, the system places a minimum threshold on net assets of $500 million. Fund performance data is calculated for the trailing one month, based on change in NAV.
Here is a summary of 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.