The Summer Doldrums
With many investors taking time away from the office to enjoy a late summer vacation, securities markets struggled to catch a bid in August. The Large Cap Equity Core category lost 1.6% while the Core Fixed Income category returned -0.7% for the month.
Only two categories that make up the Nasdaq Dorsey Wright Explore portion of HANDLS Indexes managed to generate positive returns in August. Riding a wave of increasing oil prices, MLPs continued what has been a strong performance in 2023, returning 0.6% for the month. High Yield Bonds also managed to eke out a positive return of 0.3% as credit spreads narrowed for riskier borrowers. At the opposite end of the spectrum, Utilities lost a whopping 6.3% in August as higher interest rates for low-risk short-term Treasuries appear to be dampening enthusiasm for the sector, which has historically been an important source of income for risk averse investors.
The Nasdaq 5HANDL Index returned -1.3% for the month. The Nasdaq 7 HANDL Index, the 1.3x leveraged version of the index, returned -1.9% in August while the Nasdaq 10 HANDL Index, the 2.0x leveraged version of the index, delivered a -3.1% return.
For the year-to-date period through the end of August, the Core Large Cap Equity remained up 33.3%, trouncing all other categories included in HANDLS Indexes.
The Core Fixed Income category was up 1.5% for the year-to-date period, as investors continued to wrestle with the prospects of further inflation and more tightening from the Federal Reserve. For the income-oriented categories that make up the Nasdaq Dorsey Wright Explore portion of HANDLS Indexes, the Growth & Income category remained the leader for the year-to-date period, providing a 15.5% return. MLPs were close behind with a return of 15.0% for the year-to-date period. The disastrous month for Utilities left the category with a -10.0% return for the year, the only income-oriented category tracked by HANDLS Indexes to generate negative returns on a year-to-date basis.
The Nasdaq 5HANDL Index was up 7.3% through the end of August, versus returns of 8.3% and 10.8% for the Nasdaq 7 HANDL Index and Nasdaq 10 HANDL Index, respectively.
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