The problem is that while stocks have rallied, most of the
action is due to large-caps. This calls into question what people
mean when they argue that despite last week's disappointing jobs
report, the rally we've seen this year isn't over.
Is a rally not really a recovery? A quick look at some select
ETFs is worthwhile to understand what's going on and what's not
Below, we have the major U.S.-focused equities ETFs offered by
Vanguard that focus on different-sized companies.
Over the past year, emerging market equities have lagged the
broad global total market as well as the broad U.S. market.
The Vanguard MSCI Emerging Markets ETF (NYSEArca:VWO) is down
12.54 percent over the course of the year while the Vanguard Total
World Stock Index Fund (NYSEArca:VT) is only down 4.26 percent, and
the U.S.-focused Vanguard Total Stock Market Fund (NYSEArca:VTI) is
up 5.46 percent.
Should the consumer base in the U.S. strengthen with better jobs
numbers and a true reduction in the unemployment rate, we can
probably expect to see some pickup in emerging market equities.
It's anyone's guess at this point, but it seems to me that
investors may be leaving some money on the table with their focus
on U.S. large-cap equities.
Again, it could be the nature of this unique recovery, but only
time will tell.
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