Commodities remained the best-performing asset class by far last week among major asset classes, based on a set of ETFs through Friday’s close (Mar. 4). The ongoing Ukraine war is the catalyst and for the immediate future more of the same appears to be the likely path ahead.
WisdomTree Continuous Commodity Index Fund (NYSE:GCC) surged more than 13% last week, delivering a blowout performance that left the rest of the field far behind. At some point there will be a dramatic reversal for prices of raw materials — when signs of peace, if only in relative terms, emerge in Ukraine. But as we write, those signs are nowhere on the immediate horizon.
Although commodities dominated market gains last week, there were other advances. Inflation-indexed bonds issued by foreign governments (WIP) and the US Treasury (TIPS) rose. Vanguard Real Estate Index Fund ETF (NYSE:VNQ) and Vanguard Total Bond Market Index Fund ETF (NASDAQ:BND) also increased.
Otherwise, losses cut into most markets. The deepest setback last week within the major asset classes: bonds issued by governments in emerging markets. VanEck J.P. Morgan EM Local Currency Bond ETF (NYSE:EMLC) fell sharply, posting a hefty 6.6% weekly loss that left the fund at its lowest level in nearly two years.
The general downside bias took a bite out of the Global Market Index (GMI.F) last week via a 2.2% loss. This unmanaged benchmark, maintained by CapitalSpectator.com, holds all the major asset classes (except cash) in market-value weights via ETF proxies.
Reviewing the major asset classes on a trailing one-year basis now shows commodities with a commanding lead. WisdomTree Enhanced Commodity Strategy Fund (GCC) is up 39.7% over the past 12 months through Friday’s close.
The biggest one-year loser: foreign junk bonds (IHY), which are down 11.9% for the past 12 months.
Profiling markets based via current drawdown indicates that about half are posting peak-to-trough declines of -10% or deeper.
GMI.F ended last week at 9.3% below its previous peak.
