A new asset class has overtaken international equities at the top of DALI's rankings.

Domestic and international equities have been focal points of relative strength within DALI’s asset class rankings over the last several months. However, with movement earlier this week, we saw domestic equities move back to top spot in DALI for the first time since February, leaving international equities closely behind in second. However, the shift in favor of the US market hasn’t been due to weakness from foreign markets. Over the last three months, international equities picked up 8 signals, but domestic equities gained 23 signals over that same span, underscoring the recent strength of both groups.

Changes at the top of DALI are important to take note of, as the power of number one has a long track record of success. Investing in the top asset class at the end of every month would have grown a portfolio of 100k to more than 500k since the start of 2000, outperforming not only the average asset class but also the S&P 500. Meanwhile, avoiding the laggard asset classes has been equally important, as the bottom ranked asset class has lost money over the last 26 years.

Both domestic and international equities remain key areas of emphasis, even with domestic equities taking the lead. The two asset classes are separated by a single signal, meaning their positions could swap at a moment’s notice. Additionally, both groups maintain a substantial lead over other asset classes, as international equities hold a 123-signal lead over the third ranked commodities group. With global equities sitting head and shoulders above their peers, investors should continue to focus on US and foreign stocks, as the market’s risk-on positioning remains firmly intact.