Asset Class Scoreboard: Red October – ValueWalk Premium
Asset Class Scoreboard

Asset Class Scoreboard: Red October

Article by RCM Alternatives

Q3 hedge fund letters, conference, scoops etc

Even if one of our favorite books/movies is the Hunt for Red October – it was a little disconcerting to see a sea of red on the asset class scoreboard in October – with nowhere to hide among traditional stocks and bonds or alternatives like Managed Futures, Hedge Funds, and Commodities.  No quarter was given in the reddest October for investments since the depths of the financial crisis 10 years ago, October of 2008 (where managed futures were singing a decidedly different tune).

What happens from here is the big question. The previous 5 years have taught investors that stocks quickly rebound from these types of sell offs. But, this time sure does feel a bit different, if for not other reason than it is interest rate driven. If we see continued weakness, look for managed futures to move from their short term positive correlation to equities to a more negative correlation, while hedge funds remain correlated (but losing less than equities).

The US elections on Nov. 6th could be a catalyst one way or the other, and everyone will be glued to their favorite network anxiously watching results. In the meantime, here’s the October blood bath:

Asset Class Scoreboard

Past performance is not necessarily indicative of future results.

Asset Class Scoreboard

Source: All ETF performance data from Morningstar.com

Sources: Managed Futures = SocGen CTA Index,

Cash = US T-Bill 13 week coupon equivalent annual rate, with YTD the average 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)


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