Noteworthy Developments
Global equities, as represented by the MSCI ACWI Index, appreciated 2.5% during August, with positive performance across all major regions.
Global Equities
Global equities increased by 2.5%, with US large-cap equities (S&P 500) up 2.4%, international developed equities up 3.3% and emerging market equities gaining 1.6%.
The strong performance of the S&P 500 was driven by ongoing positive AI sentiment and better-than expected corporate earnings. US equity markets were also buoyed by increasing prospects for near term interest rate cuts following weak job market reports indicated a faster-than-expected cooling of the labor market. Developed equity markets’ performance (+0.5% in local currency) was positively impacted by currency translation, with the USD weakening considerably during the month. In local currency terms, European equities were up 1.6% and Japanese equities down 2.7%. The gains in emerging markets were primarily driven by strength in Taiwan equities (+3.4%), which benefitted from semiconductor stocks’ strong performance.
Globally, growth stocks (+2.4%) and value stocks (+2.7%) both performed well. Almost all sectors delivered positive performance. Healthcare and consumer staples sectors (+5.5% and +5.0%) performed best, while energy and consumer discretionary sectors (-0.5% and 0.7%) performed worst. Within the US, small-cap stocks appreciated 7.1%, with gains driven by positive sentiment around likely US interest rate cuts, as small-caps are more sensitive to rate cuts than large caps given that they carry higher debt balances.
Fixed Income
The US Aggregate Bond Index was up 1.4%, with performance driven by coupon income, and price appreciation driven by declining bond yields. US government bonds were up 1.3% as bond yields declined across the curve by 15bps to 35bps (shorter-term bond yields declined more than longer term yields). Investment-grade corporate bonds appreciated by 1.6% with performance benefiting from declining base rates and modest spread compression. High-yield bonds were up 1.6%, with
positive contributions driven by high coupon rates and declining base rates. Leveraged loans were up 0.6% with performance driven by high current income offset by modest spread widening.
Alternatives
The HFRX Global Hedge Fund Index was up 1.1%, with all major strategies delivering positive performance. Global macro / trend following (+2.0%) and long/short equity (+1.5%) strategies performed best.
Manager Comments
Waterfall: +5.0%
Outperformed the HFRX Global Hedge Fund Index (+1.1%) with performance driven by general tightening in structured credit spreads coupled with outperformance from idiosyncratic positions, including those in the aircraft sector.
USD August Market Commentary
Noteworthy Developments
Global equities, as represented by the MSCI ACWI Index, appreciated 2.5% during August, with positive performance across all major regions.
Global Equities
Global equities increased by 2.5%, with US large-cap equities (S&P 500) up 2.4%, international developed equities up 3.3% and emerging market equities gaining 1.6%.
The strong performance of the S&P 500 was driven by ongoing positive AI sentiment and better-than expected corporate earnings. US equity markets were also buoyed by increasing prospects for near term interest rate cuts following weak job market reports indicated a faster-than-expected cooling of the labor market. Developed equity markets’ performance (+0.5% in local currency) was positively impacted by currency translation, with the USD weakening considerably during the month. In local currency terms, European equities were up 1.6% and Japanese equities down 2.7%. The gains in emerging markets were primarily driven by strength in Taiwan equities (+3.4%), which benefitted from semiconductor stocks’ strong performance.
Globally, growth stocks (+2.4%) and value stocks (+2.7%) both performed well. Almost all sectors delivered positive performance. Healthcare and consumer staples sectors (+5.5% and +5.0%) performed best, while energy and consumer discretionary sectors (-0.5% and 0.7%) performed worst. Within the US, small-cap stocks appreciated 7.1%, with gains driven by positive sentiment around likely US interest rate cuts, as small-caps are more sensitive to rate cuts than large caps given that they carry higher debt balances.
Fixed Income
The US Aggregate Bond Index was up 1.4%, with performance driven by coupon income, and price appreciation driven by declining bond yields. US government bonds were up 1.3% as bond yields declined across the curve by 15bps to 35bps (shorter-term bond yields declined more than longer term yields). Investment-grade corporate bonds appreciated by 1.6% with performance benefiting from declining base rates and modest spread compression. High-yield bonds were up 1.6%, with
positive contributions driven by high coupon rates and declining base rates. Leveraged loans were up 0.6% with performance driven by high current income offset by modest spread widening.
Alternatives
The HFRX Global Hedge Fund Index was up 1.1%, with all major strategies delivering positive performance. Global macro / trend following (+2.0%) and long/short equity (+1.5%) strategies performed best.
Manager Comments
Waterfall: +5.0%
Outperformed the HFRX Global Hedge Fund Index (+1.1%) with performance driven by general tightening in structured credit spreads coupled with outperformance from idiosyncratic positions, including those in the aircraft sector.
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