Major Asset Classes | August 2021 | Performance Review

The winning streak for American shares rolled on in August. US stocks rose for a seventh straight month and posted the strongest gain for the major asset classes.

The Russell 3000 Index popped 2.9% in August, the best month for US equities since April.

Overall, August was a mixed bag for the major asset classes, led by gains in US and emerging markets stocks. US and foreign real estate also posted solid advances.

Foreign bonds denominated in US dollars were the big losers. The deepest loss for the major asset classes last month: foreign investment-grade corporates, which shed 0.9%.

US bonds also lost ground in August. The Bloomberg Aggregate Bond Index slipped 0.2%, the first monthly decline for the benchmark since March.

The Global Market Index (GMI) continued to push higher in August. This unmanaged benchmark (maintained by CapitalSpectator.com), which holds all the major asset classes (except cash) in market-value weights, rose 1.8% — the seventh consecutive monthly increase. Year to date, GMI is up an impressive 12.0%. Indeed, just three of 15 asset classes listed above are posting a higher return so far in 2021.

Reviewing GMI relative to US stocks and bonds continues to show a strong middling performance over the trailing one-year period. GMI earned roughly two-thirds of the gain posted by US stocks with substantially less risk over the past 12 months. US bonds, by contrast, are flat for the trailing 12-month window.

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7 thoughts on “Major Asset Classes | August 2021 | Performance Review”

  1. DanM

    Mr. Picerno:

    An observation and question. Watching the “GMI” and the “GMI rebalanced” numbers over the years, it has struck me that the former routinely seems to outperform the latter. In the recent set of numbers, the outperformance is 1.5% over the 3 year period, not an insubstantial difference. Is this case that the lower performance in the rebalancing process is rewarded with lower volatility? Or is the difference simply a momentum play, notably the long term rise of large cap stocks, particularly in the US?

    Thanks, Dan

  2. James Picerno Post author

    Good question, DanM. It’s mostly a function of the red-hot US stock market. Generally, any rebalancing that’s taken money away from US stocks and redeployed elsewhere has come at the price of lower performance. That can’t last forever, but it certainly describes recent history.
    –JP

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