April was another solid month of recovery for the capital and commodity markets, building on March’s rise. There’s still a long way to go to repair the damage of September through February. Indeed, it’ll probably take years for all the asset classes to return to old highs. But for the moment, there’s reason to be optimistic, if only tenuously.

The big winner last month: REITs, which surged nearly 33%. Even so, this slice of the capital markets has been so heavily battered over the past year or so that even an extraordinary run does little to reverse the damage.
The lone loser in our horse race was inflation-indexed Treasuries, which slipped 1.9% in April, although for the year so far the asset class is up 3.6%. Otherwise, everything posted a gain. Our passive global market portfolio index climbed a robust 6.6% last month, an improvement on March’s roughly 5% advance. Year-to-date, GMPI is off by a fractional -0.5% vs. -1.4% for U.S. stocks, based on the Russell 3000.
It’s tempting to think that the danger’s passed. Not quite. As we explain in this soon-to-be-published May issue of The Beta Investment Report, strategic-minded investors should remain wary. Yes, expected returns look enticing. But there are still many economic and financial challenges ahead and no one should underestimate the potential for short-term volatility.
In short, these are productive days for designing and managing asset allocation, but you’ll have to work hard to generate and keep every basis point of risk premium from here on out. That starts with maintaining steely discipline. Last we checked, there are still no free lunches available.