If every month were like July, equity investors would have an easy life. The most striking thing about July’s U.S. equity market performance was how consistently good it turned out to be. The S&P 500 was up +5.09%, with the Mid Cap 400 ahead of that pace (+6.20%) and the Small Cap 600 further ahead yet (+6.84%). All 10 S&P 500 sectors rose, and all but one were up by +4% or more. Value was marginally ahead of growth, yield-tilted strategies were ahead of vanilla, and (unsurprisingly for a +5% month), High Beta beat Low Volatility. Volatility itself declined sharply, as it typically does in good markets, although our Dynamic VEQTOR Index turned in a positive (+2.31%) result.
The international equity markets were also up strongly, with the S&P Europe 350 gaining +7.42% to pace the field. Emerging markets (+0.83%) were much weaker than their developed counterparts, with Latin America (-1.64%) proving a drag on performance. Even commodities had a good month, led by their energy components — the Dow Jones-UBS Commodity Index rose by +1.36%, and the more energy-laden S&P GSCI gained +4.91%.
Of course, there’s a dark lining in every silver cloud, and this month, as in May and June, long-term interest rates rose. The S&P/BGCantor 20+ Year U.S. Treasury Index fell -1.61%, with its 7-10 year counterpart off -0.43% Shorter duration indices dodged the bullet; the S&P/LSTA U.S. Leveraged Loan 100 Index gained +1.22% in July.