In April 2024 the financial markets experienced heightened volatility due to an increase in interest rates, which impacted bond prices. Our Conservative portfolio declined by 3.86%, while our Aggressive portfolio fell 3.06%.
Our longer-term bonds were the primary driver of our Conservative portfolio underperforming Vanguard's roughly 60% stocks/40% bonds portfolio. The main upside last quarter was shorting and funds with stocks in China, explaining how our Aggressive portfolio had less downside than our Conservative portfolio in a down month.
Proshares Short Bitcoin (BITI) surged 18.79%, benefiting from Bitcoin's significant price drop as the post-ETF launching craze flattens out. ProShares Decline of Retail (EMTY) rose 13.06% as consumer spending weakened amidst sticky inflation. Franklin FTSE China (FLCH) gained 4.63% due to China's improved economic performance and strong industrial output, plus months of poor performance turning around in February of this year.
Franklin FTSE South Korea (FLKR) dropped 6.33%, impacted by regional geopolitical tensions involving North Korea and China. FLJP fell 5.61% amid Japan's sluggish economic recovery. Franklin FTSE Brazil (FLBR) decreased by 4.20%, adding to a poor 2024. Vanguard Communication ETF (VOX) was down 3.98%, mainly due to poor performance in tech-heavy stocks pressured by rising interest rates. Communications funds are no longer just Verizon-type companies but contain around 50% mega-cap tech stocks like Meta (Facebook) and Alphabet (Google).
In April 2024, some of the hottest areas in an otherwise down market were funds focusing on precious metals. These surged nearly 5% as gold and silver continued to do well on inflation worries and foreign central bank buying, and doom and gloomier fears over the collapse of money because of rising government deficits. Gold is "boomer bitcoin." Strangely, Bitcoin had a terrible month even though both it at gold trade are attractive to anxious investors.
Chinese stock funds rose over 4%. Commodities funds, including oil and metals, gained around 3%, benefiting from resilient prices and a not slowing much U.S. economy. Indian equity funds increased over 2%, continuing a strong run as essentially the best performing foreign market over the last decade and the only country with near U.S. stock market returns over this longer period. On the downside last month, digital asset funds plummeted 20%. Real estate funds fell almost 7% because of rising interest rates. Small-cap growth, health, and mid-cap growth funds also faced declines in the high-interest-rate environment, dropping around 6% to 7%.
The economy and markets are still trying to thread the needle of reducing inflation without causing a recession. So far, so good. But it always is until it isn't.
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In April 2024 the financial markets experienced heightened volatility due to an increase in interest rates, which impacted bond prices. Our Conservative portfolio declined by 3.86%, while our Aggressive portfolio fell 3.06%.
Benchmark Vanguard funds for April 2024: Vanguard 500 Index Fund (VFINX) was down 4.09%, Vanguard Total Bond Index (VBMFX) declined 2.44%, Vanguard Developed Mkts Index (VTMGX) decreased by 3.35%, and Vanguard Emerging Mkts Index (VEIEX) posted a modest gain of 1.02%. Vanguard Star Fund (VGSTX), a global balanced portfolio, was down 3.38%.
Our longer-term bonds were the primary driver of our Conservative portfolio underperforming Vanguard's roughly 60% stocks/40% bonds portfolio. The main upside last quarter was shorting and funds with stocks in China, explaining how our Aggressive portfolio had less downside than our Conservative portfolio in a down month.
Proshares Short Bitcoin (BITI) surged 18.79%, benefiting from Bitcoin's significant price drop as the post-ETF launching craze flattens out. ProShares Decline of Retail (EMTY) rose 13.06% as consumer spending weakened amidst sticky inflation. Franklin FTSE China (FLCH) gained 4.63% due to China's improved economic performance and strong industrial output, plus months of poor performance turning around in February of this year.
Franklin FTSE South Korea (FLKR) dropped 6.33%, impacted by regional geopolitical tensions involving North Korea and China. FLJP fell 5.61% amid Japan's sluggish economic recovery. Franklin FTSE Brazil (FLBR) decreased by 4.20%, adding to a poor 2024. Vanguard Communication ETF (VOX) was down 3.98%, mainly due to poor performance in tech-heavy stocks pressured by rising interest rates. Communications funds are no longer just Verizon-type companies but contain around 50% mega-cap tech stocks like Meta (Facebook) and Alphabet (Google).
BondBloxx Six Month Treasury ETF (XHLF) slightly increased by 0.34%, as short-term bonds don't go up or down much with rising rates. On the other end of the yield curve, Vanguard Extended Duration Treasury (EDV) fell 9.12%, heavily hit by rising long-term interest rates affecting long-duration bonds.
In April 2024, some of the hottest areas in an otherwise down market were funds focusing on precious metals. These surged nearly 5% as gold and silver continued to do well on inflation worries and foreign central bank buying, and doom and gloomier fears over the collapse of money because of rising government deficits. Gold is "boomer bitcoin."
Strangely, Bitcoin had a terrible month even though both it at gold trade are attractive to anxious investors.
Chinese stock funds rose over 4%. Commodities funds, including oil and metals, gained around 3%, benefiting from resilient prices and a not slowing much U.S. economy. Indian equity funds increased over 2%, continuing a strong run as essentially the best performing foreign market over the last decade and the only country with near U.S. stock market returns over this longer period. On the downside last month, digital asset funds plummeted 20%. Real estate funds fell almost 7% because of rising interest rates. Small-cap growth, health, and mid-cap growth funds also faced declines in the high-interest-rate environment, dropping around 6% to 7%.
The economy and markets are still trying to thread the needle of reducing inflation without causing a recession. So far, so good. But it always is until it isn't.