The fund returned -0.62% in November with mixed performance across the four asset classes.
Global stocks soared higher this month as major market averages set new record highs, including the Nasdaq, Dow Jones and S&P 500. With this month’s gains, U.S. stocks (measured by the S&P 500) have rallied over 20% since last year’s presidential election. The growing likelihood of U.S. tax reform provided an accelerant to the U.S. equities uptrend. Yet, despite new record highs in stocks, signs of caution showed up in both sovereign and high-yield bond markets. The Federal Reserve is widely expected to raise rates in December, while unwinding its balance sheet at an increasing pace.
Other asset classes were mixed in November. The big story in commodities was the recent rebound in crude oil and associated products as we saw the first broad uptrends emerge across the energy complex in years. Industrial metals and agricultural markets have also shown persistent trends in recent months. These new price trends have caused us to boost commodities exposure above equities this month. Meanwhile, lackluster price movements in currencies and fixed income kept exposure low in those sectors.Performance (as of 11/30/2017)
Despite record highs in U.S. stock markets, minor cracks appeared under the surface. High-yield bonds plunged mid-month, failing to confirm new highs in equities. The U.S. yield curve continued to flatten, typically a signal of slowing economic growth while some overseas equity markets incurred bouts of turbulence. We saw notable declines in emerging markets and in the stock markets of European periphery countries. Chinese equities suffered their worst monthly performance of 2017, which coincided with a decline in the country’s bond market.
Despite signs of instability, the broader trends across the equity asset class remain largely positive. As disciplined trend followers, this means we maintain a healthy allocation to the broad uptrends still in place across the globe. Meanwhile, our growing commodities allocation provides diversification away from traditional asset classes and the opportunity to capture uncorrelated risk premiums.