February witnessed a bit of mean reversion among the major asset classes as the winners and losers at the extremes in recent history traded places last month. The bearish trend in commodities (Bloomberg Commodity Index) eased as the asset class generated its first monthly gain since June 2014. Meanwhile, the high-flying real estate sector (real estate investment trusts) stumbled in February, marking the first case of red ink in five months. As a result, REITs (MSCI REIT Index) were dead last in February’s horse race, retreating by 3.6% on a total return basis. As for the top performer, the award goes to foreign equities in developed markets. The MSCI EAFE rallied sharply last month, advancing 6.0% in US dollar terms (unhedged). US equities were in close pursuit, climbing 5.8% via the Russell 3000 Index.

The generally buoyant mood in February juiced the Global Market Index (GMI), an unmanaged benchmark that holds all the major asset classes in market-value weights. In contrast with January’s loss, GMI rallied last month, posting a robust 3.3% gain, thanks to profits in the benchmark’s heavily weighted components. For the trailing 1-year window, however, GMI’s 4.9% advance still looks modest compared with recent history. The tick lower in the annual return vs. the previous month continues to pare the wide spread between the trailing performance and the lesser risk premia projections of late (see last month’s update, for instance).