Today marks the first trading day in the second quarter. As we do at the end of each quarter, we will recap the changes that we have seen throughout the various asset classes.
Today marks the first trading day in the second quarter. As we do at the end of each quarter, we will recap the changes that we have seen throughout the various asset classes. Financial markets delivered mixed results across the board, driven by conflict in the Middle East, inflation uncertainty, and concerns regarding the US economy. These trends set the stage for an intriguing second quarter, as we continue looking for areas of strength.
Domestic Equities
Large cap-weighted indices struggled in the first quarter as the S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ) fell 4.37% and 5.93%, respectively. However, the Invesco S&P 500 Equal Weight ETF (RSP) was able to finish the quarter in the black with a small gain of 0.61%. Small and mid-caps also shook off the weakness in exhibited in the large cap space. The iShares Russell Midcap ETF (IWR) was the best-performing ETF out of the five US equity ETFs observed with a gain of 1.27%. Large caps still hold a lead on a long-term basis, but this past quarter has raised concerns over softening leadership.
International Equities
International equities moved into the top spot in our DALI asset class rankings in March. While the asset class wasn’t insulated from broader market volatility, both developed and emerging market representatives ended the first quarter with gains above 1%. The iShares MSCI EAFE ETF (EFA) was up a respectable 1.15% while the emerging market representative, iShares MSCI Emerging Markets ETF (EEM), won the quarter with a 3.80% gain.
Commodities
Commodities had a wild quarter as oil prices flew higher while precious metals aggressively pulled back from highs. The iShares S&P GSCI Commodity Indexed Trust (GSG) gained nearly 40% in the first quarter. While gold pulled from highs established during the first quarter, the SPDR Gold Trust (GLD) still gained 8.57%. It’s yet to be seen if the recent run in commodities is a flash in the pan or a long-term development, but action in Q2 should give us some more answers.
Fixed Income
Fixed Income struggled as rates roared higher on inflation fears before backing off to opening year levels. The iShares 7-10 Year Treasury Bond ETF (IEF) was essentially flat for the quarter with a loss of 0.13%. The outlook for rates cuts for the rest of the year has swung wildly over the last few weeks and further muddying the waters for the asset class.
