Markets in perspective – November 2015 in review
Key points on global market themesThe global economy continued to grind slowly forward in November 2015. Global macroeconomic news was mixed for the month, resulting in an essentially flat 10-year U.S. Treasury yield and Russell 3000® Index. Central bank divergence continued as the European Central Bank approved further stimulus and the likelihood of an interest rate hike in December by the U.S. Federal Reserve becomes increasingly likely. Following is Russell Investments’ Chief Investment Officers’ views of the key themes affecting market performance in November 2015. All data is as of November 30, 2015. Sources and indexes used to represent asset classes can be found in the disclosures section.
- Markets moved sideways
- Rate sensitive sectors lagged
- Emerging markets sold off
- Short-term Treasury rates rose
- Flight to quality
- USD strengthened
- Commodities trended lower on strong USD and weak global demand
Asset Class Dashboard – November 2015The November reading of the Asset Class Dashboard reflects the slow forward progress of most asset classes based on 12-month returns ending November 30, 2015. Only Commodities and Global Infrastructure have experienced performance that falls below their respective historically typical ranges. The remaining asset classes have hovered at the low end of their historically typical ranges for quite some time now. Looking ahead, Russell Investments’ strategists and portfolio managers are keeping an eye on how much of the likely upcoming Fed interest rate hike is already priced in – and its associated impact on the emerging markets and commodities outlook. Our positioning is roughly neutral on the U.S market. We continue to see opportunities in European equities and high yield. We also expect the U.S. dollar to continue its appreciation. Large cap U.S. equity: Russell 1000® Index, Large cap Defensive U.S. equity: Russell 1000 Defensive Index, Large cap dynamic U.S. equity: Russell 1000 Dynamic Index, Small cap U.S. equity: Russell 2000 Index, Non-U.S. Equity: Russell Developed ex-U.S. Large Cap Index, Global equity: Russell Developed Large Cap Index, Emerging markets: Russell Emerging Markets Index, Commodities: Dow Jones – UBS Commodity Total Return Index, Global infrastructure: S&P Global Infrastructure Index, Global real estate: FTSE EPRA/NAREIT Developed Index, Cash: Citigroup 3-Month U.S. Treasury Bill Index, Global high yield bonds: Bank of America Merrill Lynch (BofAML) Global High Yield Index, Emerging markets debt: JP Morgan Emerging Markets Bond Index Plus, U.S. bonds: Barclays U.S. Aggregate Bond Index. How do I read this chart? This dashboard is intended as a tool to set context and perspective when evaluating the current state of a sample of asset classes. The ranges of 12 month returns for each asset class are calculated from its underlying monthly index returns. The stated inception date is the first full month of an index's history available for the dashboard calculation. Here is how to read the graphic on this page: FOR EACH INDICATOR, THE HORIZONTAL BAR SHOWS FOUR THINGS A GRAY BAR shows the full range of historical rolling 12-month returns for a sample of asset classes. A BLUE COLOR BAND represents the typical range (one standard deviation away from the mean, i.e. 68% of historical observations) of rolling 12-month returns for these asset classes. AN ORANGE MARKER represents the most recent 12-month return of the asset classes. A WHITE LINE within the blue bar represents the mean of the historical observations.
Corresponding indexes/sources by section:
• Developed markets represented by Russell Developed Large Cap Index • Sectors represented by Russell 1000® Index Utilities, REITs, Telecommunications, Financials, Information Technology, Industrials, Energy and Materials sectors • Emerging markets represented by Russell Emerging Markets Index
• Investment grade bonds represented by Barclays U.S. Corporate Investment Grade Index and Barclays Euro-Aggregate: Corporates Index
• Commodities represented by Bloomberg Commodities index • Oil represented by WTI crude prices • Hedge fund strategies data as observed across third party managers by Russell Investments • REITs represented by FTSE EPRA/NAREIT Developed Real Estate Index • Infrastructure represented by S&P Global Listed Infrastructure Index