Despite Commodities Surge, July Returns Fail to Excite

 

Most investors were hoping for fireworks in July, however, returns this month largely fell flat, with a few exceptions.

 

The bright spot was commodities, as measured by the GSG ETF. The index surged +10.83% in July, its best month this year. Crude oil prices rose over 10% during the month, driving gains in energy commodities. Agricultural commodities also rallied on favorable weather and crop conditions.

 

However, other alternatives provided minimal diversification benefits and failed to participate in commodities’ outperformance. U.S. stocks returned a solid +3.27%, but real estate gained only +1.74%. Bonds and hedge funds posted negligible returns near zero.

 

After providing some protection in the first half, managed futures had losses in July, falling -1.06%. While the strategy has underperformed recently, it has a track record of generating gains during periods of increased volatility and market stress. Investors should remain patient and maintain faith in managed futures’ ability to deliver diversification over the long term.

 

Past performance is not indicative of future results.

Past performance is not indicative of future results.

Sources: Managed Futures = SocGen CTA Index,
Cash = US T-Bill 13 week coupon equivalent annual rate/12, with YTD the sum of each month’s value,
Bonds = Vanguard Total Bond Market ETF (NYSEARCA:BND),
Hedge Funds = IQ Hedge Multi-Strategy Tracker ETF (NYSEARCA:QAI)
Commodities = iShares S&P GSCI Commodity-Indexed Trust ETF (NYSEARCA:GSG);
Real Estate = iShares U.S. Real Estate ETF (NYSEARCA:IYR);
World Stocks = iShares MSCI ACWI ex-U.S. ETF (NASDAQ:ACWX);
US Stocks = SPDR S&P 500 ETF (NYSEARCA:SPY)

All ETF performance data from Y Charts