Despite a flurry of unnerving headlines during the quarter, the volatility of global stocks remains at historic lows. Major indices in the U.S., Europe and Asia have managed to avoid a retreat of 5% or more so far in 2017. Typically, 5% pullbacks occur once per quarter with 10% corrections at least annually, and 20% drops once per market cycle for most developed stock markets.
Emerging market stocks registered another strong quarter returning 6.3% for the period. International developed stocks and US stocks also rose, returning 5.6% and 3.0% respectively. Global real estate increased 2.0%, while U.S bonds returned 1.7% and global bonds returned 0.4%. Commodities declined for the second quarter in a row falling 3.0% for the period. With the first half of 2017 in the books, six of the seven major asset classes are in positive territory.
Equities led the way with Emerging Markets stocks returning 11.5%, International Developed stocks returning 6.8% and U.S. stocks returning 5.7% for the period. U.S bonds, global bonds and real estate reversed their retreat from last quarter and commodities registered the only negative return for the quarter.
Every year has its fair share of surprises. Many are welcome, some are not, and most don’t make sense without days, months, or even years of hindsight. We are pleased to report that 2016 was a good year for the capital markets, particularly in light of its five biggest surprises (to be detailed in our downloadable pdf report below).
Reflecting back on 3rd quarter asset class performance, disappointments were few and far between. Stocks provided solid returns across the globe, as domestic and global bonds inched forward. Real estate’s climb paused and commodities retraced earlier gains. Investors welcomed the mostly upward trend as last quarter ended with volatility surrounding Brexit.