The question facing investors as they enter the new quarter probably isn’t where to find the biggest gains. It’s more likely how to avoid the worst losses.
Both the American benchmark stock gauge and the Bloomberg Barclays U.S. aggregate bond index just posted a three-month loss for the first time since mid 2016. Emerging-market dollar debt slid, as did an index of commodities. Of major global assets, developing-nation stocks stood out as gaining — but even they fell in both February and March.
The gloomy outlook is a sea change from recent years, when stocks, bonds and other assets rallied in unison against the backdrop of easy money and synchronized global growth. But markets have been roiled in recent weeks by concerns over tighter monetary policy, talk of a potential trade war and a sell-off in technology stocks.
“There isn’t always somewhere to hide,” David Schawel, chief investment officer at advisory firm Family Management Corp., wrote in a blog post. “To some degree, investors have become accustomed to a heuristic of ‘if stocks sell off, then bonds go up.’ While the flight-to-quality narrative does play out from time to time, it’s clearly not always true.”
Here’s a look at how seemingly all the biggest assets disappointed in the first quarter:
No matter where you put your money as a developed-market stock investor in the first three months of 2018, chances are you probably took a loss. In dollar terms, U.S. and German equities were particularly hard hit. A small gain in Japanese shares helped the main Asian gauge, but not enough to stop it from also finishing in the red.
Investors pulled about $9.7 billion out of exchange-traded funds that track global corporate bonds in the first quarter, according to data compiled by Bloomberg. For the biggest U.S. investment-grade ETF, that meant the worst quarter of outflows on record.
Those outflows showed up in returns data, with a Bloomberg Barclay’s Index of U.S. corporate bonds posting a 2.3 percent loss for the first three months of the year.