Stocks bounced around, but ultimately ended higher for the week ended May 7, 2021. Investors continued to get good news on a number of fronts. Despite Secretary Yellen's comments that interest rates may need to rise to stem strong economic growth, the lowest "pandemic era" jobless claims yet encouraged buying. Shares of "reopening stocks" were really what drove markets higher as the likes of Royal Carribean appreciated. In an interesting (but all too familiar) twist, it was bad news that really propelled stocks. On Friday, US payroll adds came in far below expectations and that encouraged investors that the Federal Reserve would restrain itself from rate increases. For the week, bonds echoed the inflation fears and ended lower as the yield on the US 10-year treasury note rose by about 0.08% to 1.57%, according to MarketWatch.
Geographically, all regions were positive, but it was Non-US Developed that carried the world as the region was up over 2% while Emerging Markets was just above the flatline. From a factor perspective, investors fled Tech and Tech-related stocks, hurting Momentum for the week, but Value, Size, and Low Volatility beat the market handily. The long-term results continue to demonstrate factor efficacy, as shown in the table to the right. As can be seen, for the 15-year periods 3 out of 5 factors win although Size is close for a fourth.
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Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s). Moreover, you should not assume that any of the above content serves as the receipt of, or as a substitute for, personalized investment advice from Metric Financial.
USA is the MSCI USA index, Non-US Developed is the MSCI EAFE index, Emerging Markets is the MSCI Emerging Markets index, and All Country World is the MSCI ACWI index. One cannot invest in an index. Because the factor indexes have varying inception dates, some of the returns provided are back-tested and do not represent actual performance. Inception dates are as follows:
Momentum = MSCI ACWI Momentum NR USD Index (Inception: 11/30/95)
Value = MSCI ACWI Enhanced Value NR USD Index (Inception: 5/29/15)
Quality = MSCI ACWI Quality NR USD Index (Inception: 5/29/92)
Low Volatility = MSCI ACWI Minimum Volatility (USD) NR USD Index (Inception: 5/28/93)
Size = MSCI ACWI Risk Weighted NR USD Index (Inception: 4/6/11)
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Returns for global market and factor indexes. As of 5/7/21. Source: Morningstar.