The Great Rotation continues, you see. It’s not a physical turning of the world, of course – though some days it feels like it should be1 – but a shifting of funds away from the usual suspects. Those ‘Magnificent Seven’2, bless their algorithmic hearts, are no longer quite the only game in town. It’s a bit like discovering there’s more than one kind of sausage, really.
February saw a particular fondness for stocks from Developed Economies, excluding our own. The Vanguard FTSE Developed Markets Index Fund ETF (VEA 2.36%) climbed a respectable 6.1%, and is currently boasting a 7.5% gain for the year. A solid performance, though one suspects the numbers are being massaged by highly-trained accountants and a liberal application of wishful thinking.
Gold, naturally, had a good month. It always does when things feel…precarious. A shiny distraction, if you will. Real Estate Investment Trusts (REITs) also perked up, both foreign and domestic. Foreign REITs managed a 5.8% rise, while our own eked out 5.4%. One imagines a lot of frantic property assessments and optimistic appraisals involved.
Meanwhile, the S&P 500 index dipped a rather unenthusiastic 0.9% for February, and is down 0.7% year-to-date. This is largely due to the fact that it’s weighted towards those aforementioned Magnificent Seven, who, let’s be honest, can move the whole index with a particularly vigorous sneeze. The Nasdaq-100 fared even worse, down 2.3%. A clear indication that relying heavily on a handful of tech giants is… well, let’s call it ‘suboptimal risk management’.
The World Beyond Our Shores
The VEA ETF, for those unfamiliar, is a collection of stocks from advanced economies. Roughly half are European, a third from the Pacific Rim, and the rest a mix of Canada and… well, places. It’s a diversification strategy, you see. A sensible attempt to avoid putting all your eggs in one, increasingly volatile, basket. These nations have been doing rather well, you see, with healthy economic growth, government stimulus, and a growing reluctance among investors to be bullied by tariffs and policies that seem designed to irritate everyone involved.
And then there’s valuation. US stocks, shall we say, have become… ambitious in their pricing. Investors, being creatures of (some) reason, are starting to look for better value elsewhere. It’s a bit like discovering that the dragon’s hoard isn’t quite as full of gold as everyone thought.
REITs, as any seasoned property goblin knows, tend to benefit from lower interest rates. They rely heavily on debt to acquire more properties, and when borrowing is cheap, the acquisition spree begins. Futures markets suggest rates might fall later this year, which explains the recent uptick. Though, of course, predictions are notoriously unreliable. Especially when made by people wearing pointy hats.
Both of these trends – falling interest rates and a diversification away from US stocks – seem likely to continue. Which means international stocks and REITs could well outperform in the coming months. Gold and crude oil might also do well. Gold, as always, is a hedge against chaos (wars, plagues, unexpected tax audits), and wars, unfortunately, tend to send crude prices soaring. It’s a grim cycle, really.
For those wishing to participate in this shifting landscape, Vanguard offers a few options: the aforementioned developed market ETF (VEA), the Vanguard Global ex-U.S. Real Estate Index Fund ETF (VNQI 1.47%), and the Vanguard Real Estate Index Fund ETF (VNQ 1.00%). Though, a word of caution: past performance is no guarantee of future results. Especially when dealing with markets that appear to be governed by gremlins.
And finally, a cautionary tale: Bitcoin plummeted nearly 22% in February, and is down almost 45% since its peak in October. A stark reminder that speculative bubbles, however shiny, eventually burst. It’s a bit like trying to build a castle on a foundation of rainbows.
1 The subtle wobble in the Earth’s axis is, of course, unrelated. Probably.
2 A rather grandiose title, considering they mostly sell advertisements and collect data. But marketing is a powerful force, isn’t it?
Read More
- Gold Rate Forecast
- Securing the Agent Ecosystem: Detecting Malicious Workflow Patterns
- Silver Rate Forecast
- DOT PREDICTION. DOT cryptocurrency
- 4 Reasons to Buy Interactive Brokers Stock Like There’s No Tomorrow
- EUR UAH PREDICTION
- NEAR PREDICTION. NEAR cryptocurrency
- Top 15 Insanely Popular Android Games
- Did Alan Cumming Reveal Comic-Accurate Costume for AVENGERS: DOOMSDAY?
- USD COP PREDICTION
2026-03-06 16:32