Noteworthy Developments
Global equities, as represented by the MSCI ACWI Index, appreciated 1.4% during July, with mixed performance across regions.
Global Equities
Global equities increased by 1.4%, with US large-cap equities (S&P 500) up 2.2%, international developed equities down 1.4% and emerging market equities gaining 2.0%.
The strong performance of the S&P 500 was driven by a) ongoing positive AI sentiment following strong technology company earnings from Google, Microsoft, and Meta with continued robust capital spending plans, and b) generally better-than expected corporate earnings, especially in the financial sector. Developed equity markets’ performance (+1.4% in local currency) was negatively impacted by currency translation, with the USD strengthening during the month. In local currency terms, Japanese equities performed well and were up 2.7%. The gains in emerging markets were driven by strength in Chinese equities (+4.8%) which benefited from governmental stimulus and Korea and Taiwan equities (+4.0% and +5.4%), which benefited from semiconductor stocks’ strong performance.
Globally, growth stocks (+2.1%) outperformed value stocks (+0.5%). Technology and communication services sectors (+4.2% and +1.8%) performed best, while defensive sectors such as health care and consumer staples sectors (both at -2.5%) performed worst.
Fixed Income
The US Aggregate Bond Index was down 0.3%, with performance driven by coupon income, and modest price weakness driven by slightly appreciating bond yields. US government bonds were down 0.4% as bond yields modestly appreciated. Investment grade corporate bonds appreciated by 0.1% with slightly higher base rates and modest spread compression offsetting each other. High-yield bonds were up 0.5% with positive contributions largely driven by high coupon rates. Leveraged loans were up 0.9% with strong performance driven by high current income coupled with spread tightening.
Alternatives
The HFRX Global Hedge Fund Index was up 0.6%, with most strategies delivering positive performance. Convertible arbitrage (+1.2%) and long/short equity (+0.7%) strategies performed best.
Manager Comments
Waterfall: +2.0%
Outperformed the HFRX Global Hedge Fund Index (+0.6%) with performance driven by general tightening in structured credit spreads coupled with outperformance from idiosyncratic positions.
USD July Market Commentary
Noteworthy Developments
Global equities, as represented by the MSCI ACWI Index, appreciated 1.4% during July, with mixed performance across regions.
Global Equities
Global equities increased by 1.4%, with US large-cap equities (S&P 500) up 2.2%, international developed equities down 1.4% and emerging market equities gaining 2.0%.
The strong performance of the S&P 500 was driven by a) ongoing positive AI sentiment following strong technology company earnings from Google, Microsoft, and Meta with continued robust capital spending plans, and b) generally better-than expected corporate earnings, especially in the financial sector. Developed equity markets’ performance (+1.4% in local currency) was negatively impacted by currency translation, with the USD strengthening during the month. In local currency terms, Japanese equities performed well and were up 2.7%. The gains in emerging markets were driven by strength in Chinese equities (+4.8%) which benefited from governmental stimulus and Korea and Taiwan equities (+4.0% and +5.4%), which benefited from semiconductor stocks’ strong performance.
Globally, growth stocks (+2.1%) outperformed value stocks (+0.5%). Technology and communication services sectors (+4.2% and +1.8%) performed best, while defensive sectors such as health care and consumer staples sectors (both at -2.5%) performed worst.
Fixed Income
The US Aggregate Bond Index was down 0.3%, with performance driven by coupon income, and modest price weakness driven by slightly appreciating bond yields. US government bonds were down 0.4% as bond yields modestly appreciated. Investment grade corporate bonds appreciated by 0.1% with slightly higher base rates and modest spread compression offsetting each other. High-yield bonds were up 0.5% with positive contributions largely driven by high coupon rates. Leveraged loans were up 0.9% with strong performance driven by high current income coupled with spread tightening.
Alternatives
The HFRX Global Hedge Fund Index was up 0.6%, with most strategies delivering positive performance. Convertible arbitrage (+1.2%) and long/short equity (+0.7%) strategies performed best.
Manager Comments
Waterfall: +2.0%
Outperformed the HFRX Global Hedge Fund Index (+0.6%) with performance driven by general tightening in structured credit spreads coupled with outperformance from idiosyncratic positions.
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